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The Fl Corporation's dividends per share are expected to grow indefinitely by 5% per year. a. If this year's year-end dividend is $7.50 and the
The Fl Corporation's dividends per share are expected to grow indefinitely by 5% per year. a. If this year's year-end dividend is $7.50 and the market capitalization rate is 8% per year, what must the current stock price be according to the DDM? Answer is complete but not entirely correct. b. If the expected earnings per share are $15.00, what is the implied value of the ROE on future investment opportunities? (Round you answer to 2 decimal places.) 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)? (Round your answer to 2 decimal places.)
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