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Company Qs current return on equity (ROE) is 15%. It pays out 20 percent of earnings as cash dividends. Current book value per share is
Company Qs current return on equity (ROE) is 15%. It pays out 20 percent of earnings as cash dividends. Current book value per share is $60. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant forever.
The cost of capital is 20.0%.
Question: What is Qs stock worth per share?
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$95.1
$69.6
$50.3
$37.7
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