Question: ROCE and Valuation (Easy) The following are ROCE forecasts made for a firm at the end of 2009. ROCE is expected to continue at the

ROCE and Valuation (Easy)

The following are ROCE forecasts made for a firm at the end of 2009.

2010 2011 2012 Return of common equity (ROCE) 12.0% 12.0% 12.0%

ROCE is expected to continue at the same level after 2012. The firm reported book value of common equity of $3.2 billion at the end of 2009, with 500 million shares outstanding. If the required equity return is 12 percent, what is the per-share value of these shares?

2010 2011 2012 Return of common equity (ROCE) 12.0% 12.0% 12.0%

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