Question: 6. Bee Gees Corp. is expected to earn a $4 EPS (earnings per share) next year. The company is expected to grow in EPS and
6. Bee Gees Corp. is expected to earn a \$4 EPS (earnings per share) next year. The company is expected to grow in EPS and will plow back 50% of the EPS at the firm's current ROE (return on equity) of 20%. If the expected return is 15%, calculate the fair stock price. 7. Elvis Presley Corp. is trading at \$20, has a current year EPS of \$2, and anticipates an EPS of \$3 in the coming year. If the forward PE ratio of a close rival is estimated as 10 and the historical PE ratio is calculated as 8 , calculate the fair value of the stock. 8. Assume Model 2 with D1=$2 and r=10%. Calculate different P0 's with g=0%,1%, 2%,3%,4%,5%,6%,7%,8%, and 9%. Plot P0(=Y axis) against g in Excel. Comment. 9. Assume Model 2 with D1=$2 and g=5%. Calculate different P0 's with r=6%,7%, 8%,9%,10%,11%,12%,13%,14%, and 15%. Plot P0(=Y axis) against r in the same Excel file. Comment
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