EZ Electronics just paid a dividend of $10 and currently pays out all its income in the
Get step-by-step solutions with AI-powered insights and expert guidance to help you understand core concepts.
Question:
EZ Electronics just paid a dividend of $10 and currently pays out all its income in the form of dividends. The new CEO of EZ thinks that by investing 50% of earnings he can grow earnings at 10% for the next 3 years and then at the sustainable growth rate given an ROE of 12% in perpetuity. The cost of capital of the firm is 14%. How much will this impact the stock price?
Posted Date: