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Problem 12. Suppose a firm with a ROE of 15%. The earnings per share (EPS) next year are projected at $5, and the firm's earnings

Problem 12.

Suppose a firm with a ROE of 15%. The earnings per share (EPS) next year are projected at $5, and the firm's earnings retention ratio is 0.60. The required return for the firm is 12%. Compute the following for the firm:

a)Intrinsic value

b)Present value of growth opportunity

c)Tangible P/E ratio

d)Franchise value

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