All equity company X trades at a P/E multiple of 25 and is priced correctly under Gordon’s model. It has a beta of 1.2. The risk-free rate of return is 3% and the return on the market portfolio is 14%. The company pays out 40% of its earnings as dividends. The expected dividend next year is $1.50 per share. Find ROE.

Answer rating: 100% (QA)

Heres how to find the ROE Return on Equity for company X 1 Calculate the current s... View the full answer