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Assume that the dividend payout ratio will be 65 percent when the rate on long-term government bonds falls to 8 percent. Because investors are becoming
Assume that the dividend payout ratio will be 65 percent when the rate on long-term government bonds falls to 8 percent. Because investors are becoming more risk-averse, the equity risk premium will rise to 7 percent and investors will require a 15 percent return. The return on equity will be 12 percent. a) What is the expected sustainable growth rate?
bWhat is your expectation of the market P/E ratio
C To what price will the market rise if the earnings expectation is $22.00 per share?
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