11. Constant-growth DCF model (S4.4) Here are forecasts for next year for two stocks: Stock A Stock...

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11. Constant-growth DCF model (S4.4)

Here are forecasts for next year for two stocks:

Stock A Stock B Return on equity 15% 10%

Earnings per share $ 2.00 $ 1.50 Dividends per share $ 1.00 $ 1.00

a. What are the dividend payout ratios for each firm?

b. What are the expected sustainable dividend growth rates for each stock?

c. If investors require a return of 15% on each stock, what are their values?

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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Question Posted: Jul 31, 2024 02:01 AM

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11. Constant-growth DCF model (S4.4) Here are forecasts for next year for two stocks: Stock A Stock...

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Principles Of Corporate Finance

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