Question
The FI Corporations dividends per share are expected to grow indefinitely by 4% per year. a. If this years year-end dividend is $13.50 and the
The FI Corporations dividends per share are expected to grow indefinitely by 4% per year.
a. If this years year-end dividend is $13.50 and the market capitalization rate is 9% per year, what must the current stock price be according to the DDM?
b. If the expected earnings per share are $18.00, what is the implied value of the ROE on future investment opportunities?
c. How much is the market paying per share for growth opportunities (i.e., for an ROE on future investments that exceeds the market capitalization rate)?
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Economics Of Money Banking And Financial Markets
Authors: Frederic S. Mishkin
6th Edition
0321113624, 978-0321113627
