MF Corp. has an ROE of 14% and a plowback ratio of 40%. If the coming year\'s ea
ID: 2723192 • Letter: M
Question
MF Corp. has an ROE of 14% and a plowback ratio of 40%. If the coming year's earnings are expected to be $2 per share, at what price will the stock sell? The market capitalization rate is 12%. (Round your answer to 2 decimal places. Do not round intermediate calculations.)
What price do you expect MF shares to sell for in three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
MF Corp. has an ROE of 14% and a plowback ratio of 40%. If the coming year's earnings are expected to be $2 per share, at what price will the stock sell? The market capitalization rate is 12%. (Round your answer to 2 decimal places. Do not round intermediate calculations.)
Explanation / Answer
ROE 14% plowback raio 40% earning per share 2 DPS 1.2 (2*60%) cost=dividend/MP+growth 14%= 1.2/MP+2% MP= (1.2/14%)+2% Market Price= 8.59 price in 3 years would be 9.11 (8.59*1.06)
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