ABC stock has an expected ROE of 12% per year, expected earnings per share of $2, and

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ABC stock has an expected ROE of 12% per year, expected earnings per share of $2, and expected dividends of $1.50 per share. Its market capitalization rate is 10% per year.

a. What are its expected growth rate, its price, and its P/E ratio?

b. If the plowback rate were 0.4, what would be the firm’s expected dividend per share, growth rate, price, P/E, and PEG ratio?

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Essentials Of Investments

ISBN: 9780073368719

7th Edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

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Question Posted: Oct 20, 2023 06:30 AM

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ABC stock has an expected ROE of 12% per year, expected earnings per share of $2, and

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a Expected growth rate price and PE ratio with no plowback To calculate the expected growth rate we can use the following formula Growth rate Earnings ...View the full answer

Essentials Of Investments

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