Question
Sisters Corp. expects to earn $7 per share next year. The firms ROE is 16% and its plowback ratio is 0%. The firms market capitalization
Sisters Corp. expects to earn $7 per share next year. The firm’s ROE is 16% and its plowback ratio is 0%. The firm’s market capitalization rate is 13%.
a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.)
b. Calculate the price with no growth.
c. What is the present value of its growth opportunities? (Do not round intermediate calculations.)
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan Marcus
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78034698, 978-0077502287, 77502280, 978-0078034695
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