Assume a company plans to have Earnings per Share of $10 next year and plans to reinvest

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Assume a company plans to have Earnings per Share of $10 next year and plans to reinvest 40% of them at an annual rate of 24% in perpetuity.

Assume also the discount rate is 10%.

How much is the value of equity?

Related Book For answer-question

Principles Of Managerial Finance

ISBN: 978-0136119463

13th Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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Posted Date: May 18, 2023 03:53 AM

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Assume a company plans to have Earnings per Share of $10 next year and plans to reinvest

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Expert Answer:

To calculate the value of equity we can use the Gordon Growth Model w... View the full answer

Principles Of Managerial Finance

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