Using AEPs rounded sustainable growth rate of 4.65 percent (see Example 6.6) as an estimate of perpetual
Question:
Using AEP’s rounded sustainable growth rate of 4.65 percent (see Example 6.6) as an estimate of perpetual dividend growth and its current dividend of $3.00, what is the value of AEP’s stock assuming a discount rate of 5.5 percent?
Example 6.6
In 2021, American Electric Power (AEP) had a return on equity (ROE) of 11.74 percent, had earnings per share (EPS) of $4.97, and paid dividends of D0 = $3.00. What was AEP’s retention rate? Its sustainable growth rate?
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Using the constant growth mode...View the full answer
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Related Book For 
Fundamentals Of Investments Valuation And Management
ISBN: 9781266824012
10th Edition
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
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