Question
The current risk-free rate is 3 percent and the market risk premium is 4 percent. You are trying to value ABC company and it has
The current risk-free rate is 3 percent and the market risk premium is 4 percent. You are trying to value ABC company and it has an equity beta of 0.7. 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 14 percent.
- What is the value of the stock? Do not round intermediate calculations. Round your answer to the nearest cent.
- What is the present value of the growth opportunity? Do not round intermediate calculations. Round your answer to the nearest cent.
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Fundamentals of Investments Valuation and Management
Authors: Bradford Jordan, Thomas Miller
7th edition
978-0078096785, 78096782, 978-0077861636, 77861639, 978-0078115660
