Question: MBB Co. is expected to generate $8 earnings per share next year, of which $4 will be paid out as dividends. The companys ROE is

MBB Co. is expected to generate $8 earnings per share next year, of which $4 will be paid out as dividends. The companys ROE is assumed to remain at 20% forever. The expected rate of return on the stock is 15%.

a. What is MBBs current stock price?

b. What would be MBBs current stock price if there were no growth?

c. Whats the present value of growth opportunities available to MBB Co.?

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