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The market capitalization rate for Admiral Motors Company is 10%. Its expected ROE is 14% and its expected EPS is $7. The fir

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Answer #1

a. Growth rate = 0.60 × 0.14 = 0.084 or 8.4%

b. Price = $2.8 / (0.10 - 0.084) = $175

P/E = $175 / $7 = 25

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