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A firm is scheduled to earn $2.24 per share over the next year. Since the firm has an ROE of 18.2%, which is greater than
A firm is scheduled to earn $2.24 per share over the next year. Since the firm has an ROE of 18.2%, which is greater than the capitalization rate of 8.54% estimated using CAPM, management has decided to reinvest 37% of the firm's earnings back into the firm in order to generate future growth. Whatever the firm does not reinvest into the business it pays as dividends to shareholders. Calculate the current price per share for the firm.
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