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 ratio were .4, what would be the expected dividend per share, the growth rate, price, and the P/E ratio?
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