company earned $5 per share in the year that just ended. The company has no more growth
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company earned $5 per share in the year that just ended. The company has no more growth opportunities. The company has a 12 percent return on equity and a 12 percent cost of equity. What is the stock worth today?
What if the company was expected to earn $5.50 next year and then never grow again? Assuming that their return on equity and cost of equity didn't change, what would the stock be worth today?
Cost Of EquityThe cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the...
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Related Book For 
Investment Analysis and Portfolio Management
ISBN: 978-1305262997
11th Edition
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
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