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please answer all parts then I will upvote ABC Corporation has a retention ratio of 40% of earnings which is expected to continue. Financial analysts
please answer all parts then I will upvote
ABC Corporation has a retention ratio of 40% of earnings which is expected to continue. Financial analysts predict that ABC's cash earnings per share next year will be $1.2 and the company's investments will earn an annual rate of return on equity investment of 12%. ABC pays their dividends annually. The market capitalization rate on ABC's equity is 10 per cent per annum. a. What is the payout ratio? b. What is the value of a share in ABC? C. What is the expected rate of growth rate of dividends? d. What are dividends per share expected to be five years from now? How much of the value of a share in ABC should be attributed to future productive growth potential arising from reinvestment of earnings? eStep by Step Solution
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