A company has a plowback ratio of 0.5 and the required rate of return on their stocks
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Question:
A company has a plowback ratio of 0.5 and the required rate of return on their stocks is 12%. Currently their stock has an intrinsic value of $42. If the company were to lower their plow back ratio to 0.4, the price of their stock would be expected to rise to $45.
What are the company's ROE and EPS?
If the company decided to have a dividend payout ratio of 90%, what would be the stock price?
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
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