Question
Abbott Lab made $2.80 net income per share last year and paid out $1.30 in dividend. The company had a book value (or equity) per
Abbott Lab made $2.80 net income per share last year and paid out $1.30 in dividend. The company had a book value (or equity) per share of $20. The market has a risk free rate of 3.1% and market return 11.1%. Abbott has a historical beta of .90.
Whats the companys ROE?
Whats the sustainable growth rate?
Whats the discount rate using CAPM?
Calculate the stock price for Abbott based on Residual Income Model.
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Financial Management Of Health Care Organizations
Authors: William N. Zelman, Michael J. McCue, Alan R. Millikan, Noah D. Glick
2nd Edition
063123098X, 9780631230984
