Question
You are a financial analyst at Bank of America and you have collected following information for Lotus Tech Company. The company has beta of 1.5
You are a financial analyst at Bank of America and you have collected following information for Lotus Tech Company. The company has beta of 1.5 and a ROE of 20%. The dividend payout ratio is 50%. Last twelve month earnings were $4 per share. The annual dividend was just paid. The consensus estimate of the coming years market return is 13%, and T-bills currently offer a 8% return. (keep two decimal places please.)
a. What is the required rate of return of the stock? (input format: 15.32%)
a. What is the growth rate of the stock? (input format: 15.32%)
b. What is the intrinsic value of the stock? (input format: $15.32)
c. What is PVGO of the stock? (input format: $15.32)
d. Suppose your research convinces you that company will announce momentarily that it will immediately change its dividend payout ratio to 40%. Find the intrinsic value of the stock. (input format: $15.32)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To address each part of the question for Lotus Tech Company we need to work through each formula ste...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started