Question
Hewlett-Packard's (HP) expected dividends for the coming year are $0.60 and expected earnings per share are $0.80.The required rate of return for HP is 15%.HP's
Hewlett-Packard's (HP) expected dividends for the coming year are $0.60 and expected earnings per share are $0.80.The required rate of return for HP is 15%.HP's ROE is 18% and plowback ratio is 25%.
- Using the constant-growth dividend discount method, calculate the firm's intrinsic value.
- Calculate the present value of growth opportunities for HP.
- Suppose you found a positive PVGO for HP.In this case, should the firm continue with its current dividend policy or should it instead pay out 100% of earnings as dividends?
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International Financial Management
Authors: Cheol Eun, Bruce G. Resnick
8th edition
125971778X, 978-1259717789
