Question: An analyst develops the following pro forma at the end of

An analyst develops the following pro forma at the end of 2009 (in millions):


a. Forecast the cum-dividend operating income growth rate for 2011 using a 9 percent return for reinvesting cash flows.
b. You consider 9 percent to be a reasonable return for investing in the operations of this firm and also view the GDP growth rate of 4 percent to be a reasonable long-term growth rate. The 450 million shares of the firm are trading at $52 each. Do you consider them to be cheap orexpensive?
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  • CreatedMarch 17, 2012
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