3. ABC Inc. is a stable growth, dividend paying firm that is expected to pay out 60%...
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Question:
3. ABC Inc. is a stable growth, dividend paying firm that is expected to pay out 60% of its expected earnings per share of $1.50 next year as dividends. If the earnings are expected to grow 3% a year ion perpetuity and the cost of equity is 9%. what P/E ratio would you expect the firm to have?
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