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QBank has: Expected Earnings per share (EPS) next year of $8.33; payout ratio of 0.6; ROE of 25%; and, cost of capital of r=15%. i.
QBank has: Expected Earnings per share (EPS) next year of $8.33; payout ratio of 0.6; ROE of 25%; and, cost of capital of r=15%. i. Calculate the expected growth rate of the firm. ii. If the firm pursues a no growth strategy, what will its value be? iii. What will be the increase in the value of its share, should the firm grow at the expected growth rate? What is the source of this increase in value?
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