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PLEASE I NEED STEP BY STEP CALCULATION ON C. Q6: Nu-Tech Software Co. went public three months ago. a) The firm's stock has a market

PLEASE I NEED STEP BY STEP CALCULATION ON C. image text in transcribed
Q6: Nu-Tech Software Co. went public three months ago. a) The firm's stock has a market price of $20 per share and a book value of $12 per share. If its cost of equity capital is 15% and its book value is expected to grow at 5% per year indefinitely, determine the market's assessment of its steady state return on equity using the discounted abnormal earnings model. Calculation: Answer: b) If the stock price increases to $35 and the market does not expect the firm's growth rate to change, what is the revised steady state ROEP Calculation: Answer: C) II instead the price increase was due to an increase in the market's assessments about long-term book value growth rather than long-term ROE, what would the price revision imply for the steady state growth rate

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