Question
Company Y reinvests 40% of its earnings and has an ROE of 25%.This is expected to last forever.It has 5 million shares outstanding.The required return
Company Y reinvests 40% of its earnings and has an ROE of 25%.This is expected
to last forever.It has 5 million shares outstanding.The required return is 15%.
a)How fast will the firm grow?
b)Last year's earnings were $10 million.Just before the dividend payment of $6 million, what should the stock price be?
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Investments An Introduction
Authors: Herbert B Mayo
9th Edition
324561385, 978-0324561388
