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The current risk-free rate is 2 percent and the market risk premium is 3 percent. You are trying to value ABC company and it
The current risk-free rate is 2 percent and the market risk premium is 3 percent. You are trying to value ABC company and it has an equity beta of 0.8. The company earned $3.50 per share in the year that just ended. You expect the company's earnings to grow 2 percent per year. The company has an ROE of 12 percent. a. What is the value of the stock? Do not round intermediate calculations. Round your answer to the nearest cent. b. What is the present value of the growth opportunity? Do not round intermediate calculations. Round your answer to the nearest cent. +A
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a Value of the Stock ABC We can use the Capital Asset Pricing Model CAPM to estimate the cost of equ...
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
11th Edition
1305262999, 1305262997, 035726164X, 978-1305262997
