Question
1.Hewlett-Packard's (HP) expected dividends for the coming year are $0.60 and expected earnings per share are $0.80.The required rate of return for HP is 15%.HP's
1.Hewlett-Packard's (HP) expected dividends for the coming year are $0.60 and expected earnings per share are $0.80.The required rate of return for HP is 15%.HP's ROE is 18% and plowback ratio is 25%.
A.Using the constant-growth dividend discount method, calculate the firm's intrinsic value.(10 points)
B.Calculate the present value of growth opportunities for HP.(10 points)
C.Suppose you found a positive PVGO for HP.In this case, should the firm continue with its current dividend policy or should it instead pay out 100% of earnings as dividends?(5 points)
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Intermediate Accounting Reporting and Analysis
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
3rd edition
9781337909402, 978-1337788281
