Question
QUESTION THREE [20] 3.1 A firm projects an ROE of 18%; it will maintain a payout ratio of 40%. The firm is expecting earnings of
QUESTION THREE [20]
3.1 A firm projects an ROE of 18%; it will maintain a payout ratio of 40%. The firm is expecting earnings of R3 per share and investors expect a return of 15% on the investment. Calculate the expected share price and the P/E ratio of the firm. (10)
3.2 Discuss if gearing affect share price and weighted average cost of capital. (10)
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
