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(Stocks) ABC Corp has a 11.3% return on equity and reinvests (retains) 32% of its profits. What is the intrinsic value of the company's share
- (Stocks) ABC Corp has a 11.3% return on equity and reinvests (retains) 32% of its profits. What is the intrinsic value of the company's share of stock, to the nearest penny, if the required rate of return is 14.72% and the most recent annual dividendper share (D0) was $1.87? If your answer is, e.g., $45.365, record it as 45.37.
Answer: 17.45
Hint: Find the growth rate (g) as ROE*Retention
2 (Bonds) A zero-coupon bond has a $1,000 par value, 11 years to maturity, and sells for $547.97. What is its yield to maturity? Assume annual compounding. Record your answer to the nearest 0.01% (no % symbol). E.g., if your answer is 3.455%, record it as 3.46.
Answer: 5.62
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