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You have been provided with the following information about one company: In the next year's, the earning per share is estimated to be $6.00. The
You have been provided with the following information about one company: In the next year's, the earning per share is estimated to be $6.00. The company plans to reinvest 33% of its Return on Equity estimated to be 12%. The required rate of return of the investment in stocks is 8%. Required: 1. Explain how the company is planning to distribute its net income at the end of the next year 2. Explain the importance of the dividend model 3. Compute the price with no growth 4. Compute the price with growth 5. Explain and compute the present value of the growth opportunities
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