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16 The following data apply to the next three questions. You have been asked to estimate the growth rates and P/E ratio for Kids Soft,
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The following data apply to the next three questions. You have been asked to estimate the growth rates and P/E ratio for Kids Soft, a software firm that has the following characteristics: Beta 1.5 5% Risk free rate = Treasury bond rate Market Risk Premium (MRP) Retum on Equity (ROE) in first 5 years Return on Equity (ROE) after 5 years 6.5% 28.5714% 8.3333% Beta 1.3 30% Dividend payout ratio in first 5 years Dividend payout ratio after 5 years 40% 16 of 40 3 Marks What is your estimate to the expected growth rate during the first 5 years? O A 15% OB 20% OC. 25% OD 30% OE None of the above Unsure Step by Step Solution
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