rate positively ..
Ans 3 | first we have to compute growth rate | |||||||
Growth rate = ROE*retention ratio | ||||||||
20%*40% | ||||||||
8.0% | ||||||||
Stock price = | expected dividend next year/(required rate - growth rate) | |||||||
4*108%/(12%-8%) | ||||||||
108.00 | ||||||||
Ans = | 108.00 | |||||||
Ans 4 | Growth rate = | |||||||
Required rate - expected dividend next year/Stock price) | ||||||||
10%-2/40 | ||||||||
5.00% | ||||||||
Ans 5 | Required rate = | 2.5*105%/50+5% | ||||||
10.25% | ||||||||
Ans 6 | Expected divided next year = | Stock price*(required rate - growth rate) | ||||||
45*(10%-2%) | ||||||||
3.6 | ||||||||
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