Question: a. Using the information in Exercise 15.11, calculate the implied growth rate in residual operating income that is implicit in the market price of $42

a. Using the information in Exercise 15.11, calculate the implied growth rate in residual operating income that is implicit in the market price of $42 per share.

b. If you forecast that the growth rate in residual earnings after fiscal year 2006 will be the GDP growth rate of 4 percent, what is the expected return to buying the stock at $42?

c. Prepare a valuation grid showing what the stock is worth for alternative forecasts of return on net operating assets and growth in net operating assets.

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a First calculate the market price of the operations for it is this number we are challenging Market price of equity 42 x 2185 million shares 91770 mi... View full answer

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