Question: Company Q's current return on equlty (ROE) Is 15%. It pays out 55 percent of earnings as cash dividends (payout ratio =0.55 ). Current book

Company Q's current return on equlty (ROE) Is 15%. It pays out 55 percent of earnings as cash dividends (payout ratio =0.55 ). Current book value per share is $56. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratlo stay constant for the next four years. After that, competition forces ROE down to 12.0% and the payout ratio increases to 0.90 . The cost of capltal is 12.0%. a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5 ? (Do not round Intermedlate calculations. Round your answers to 2 decimal places.) b. What is Q's stock worth per share? (Do not round Intermedlate calculations. Round your answer to 2 decimal places.)
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