Question: EPS(1) = $6 Dividends per share (1) =0 Book Value per share (0) =$12 Company XYZ does not plan to pay any dividends in years

EPS(1) = $6 Dividends per share (1) =0 Book Value per share (0) =$12

Company XYZ does not plan to pay any dividends in years 1, 2 ,or 3. It will set dividends equal to its earnings. Assume that the ROE will stay constant over time. The opportunity cost of capital is 20%. How much is Company ABC worth per share?

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