Question
The following table contains information about four different companies, including the estimated next years EPS, payout ratio, shareholders required rate of return, and return on
The following table contains information about four different companies, including the estimated next years EPS, payout ratio, shareholders required rate of return, and return on equity (ROE): Firm A Firm B Firm C Firm D EPS $0.80 $1.15 $1.47 $1.85 Payout Ratio 30% 50% 60% 40% Required rate of Return 12% 11% 12% 14% ROE 16.00% 15.00% 14.00% 16.00% 1) Calculate each companys future earnings growth rate. Using the earnings model, what is the value of the stock? Calculate the value without growth and PVGO separately. See the first and second terms of Equation (1) in the Week 6_Lecture6_1 file. 2) Calculate the value
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