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a corporations earnings have been growing at a constant rate and this pattern is expected to continue. The firm predicts earnings per share $15 for
a corporations earnings have been growing at a constant rate and this pattern is expected to continue. The firm predicts earnings per share $15 for the next fiscal year and will pay out 30 percent of its earnings in dividends each year starting next year. The remaining portion of its earnings will be used to fund projects. The companys common stock currently sells for $125 per share, and the required return is 13.54%. Assuming its historical return on equity (ROE) is expected to continue indefinitely, compute the ROE.
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