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During 2012, Starbucks Coffees common stock had been selling for between $30 and $60. Its most recent earnings per share was $1.73, and the firm

During 2012, Starbucks Coffee’s common stock had been selling for between $30 and $60. Its most recent earnings per share was $1.73, and the firm was expected to pay a dividend of $0.68. The company’s return on equity ( net income, total common equity) has been 25 percent. You are planning on investing in 100 shares of the stock, but you want a 17 percent return on your investment. Given the limited information, what growth would you estimate for starbucks? What price would be required for you to earn your required return?

 

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