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Bad Blood has an ROE of 11%, a beta of 1.15, and traditionally its plowback ratio is 2/3. This year's earnings are $4.5 per share
Bad Blood has an ROE of 11%, a beta of 1.15, and traditionally its plowback ratio is 2/3. This year's earnings are $4.5 per share and the current year dividend has been paid. Investors expect next year's market to return 11% and the risk free rate is 5%. a. What is the price that Bad Blood should sell at? b. What is Bad Blood's ROE? c. Calculate the present value of growth opportunities.
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