ROE=15%, dividends paid $1.50, 10% of earnings paid, appropriate discount is 20% =
Homework Answers
ROE = 15%
Dividend Paid = $ 1.50
Growth Rate = Retention Ratio (1- Dividend Payout) * ROE
= (1-0.1) * 15%
= 13.5%
Price of Stock = Dividend/ ROE - Growth Rate
= 1.5/ (0.15 - 0.135)
= $100
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ROE=15%, dividends paid $1.50, 10% of earnings paid,
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