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Chiptech, Inc., is an established comp Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new

Chiptech, Inc., is an established comp

Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 a share last year, and just paid out a dividend of $.50 per share. Investors believe the company plans to maintain its dividend payout ratio at 50%. ROE equals 20% [growth rate is estimated as ROE*plowback ratio. Plowback ratio is also (1-payout ratio)]. Everyone in the market expects this situation to persist indefinitely.

uter chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 a share last year, and just paid out a dividend of $.50 per share. Investors believe the company plans to maintain its dividend payout ratio at 50%. ROE equals 20% [growth rate is estimated as ROE*plowback ratio. Plowback ratio is also (1-payout ratio)]. Everyone in the market expects this situation to persist indefinitely.

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