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Assume the following information: The investor's required rate of return is 12%. The expected level of earnings at the end of this year is $10.
Assume the following information:
The investor's required rate of return is 12%.
The expected level of earnings at the end of this year is $10.
The dividend payout ratio is 60%.
The return on equity (ROE) is 20%.
Similar shares of stock sell at multiples of 16.2 times earnings per share.
A. Determine the expected growth rate for dividends.
B. What is the stock price using the P/E ratio valuation method?
C. What is the stock price using the dividend discount model?
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Cost Management A Strategic Emphasis
Authors: Edward Blocher, Kung Chen, Thomas Lin
1st Edition
0070059160, 978-0070059160
