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Consider the following information about Nelling Corp: The expected return on the market is 8% and the riskless rate is 3%. Note that BVPS refers
- Consider the following information about Nelling Corp:
The expected return on the market is 8% and the riskless rate is 3%. Note that BVPS refers to book value per share.
- What is the companys sustainable growth rate? (2 points)
- Using the constant dividend growth model, estimate the value of the companys stock. (2 points)
- What is the book value at the end of year 1? (2 points)
- Suppose the company decreases their payout ratio to 50%. Estimate the companys stock price. (2 points)
EPS, $5 $3 DIV1 Beta 0.8 BVPS, (end of yr) $50
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American Public School Finance
Authors: William A. Owings, Leslie S. Kaplan
3rd Edition
113849996X, 978-1138499966
