Question: note that beta is constant The following data apply to the next three questions You have been asked to estimate the growth rates and P/E
The following data apply to the next three questions You have been asked to estimate the growth rates and P/E ratio for a firm that has the following characteristics? 28.5714% 8.3333% 1.3 Return on Equity (ROE) in first 5 years Return on Equity (ROE) after 5 years Beta Dividend payout ration in first 5 years Dividend payout Mer 5 years Risk free rate= ury bond rate Market Risk Premium (MRP) 30% 40% 5% 6.5% What is your estimate to the expected growth rate during the first 5 years? O a 18% Ob. 19% OC 20% Od 30% O e None of the above Wat is your estimate to the expected growth rate after 5 years? O a 3% Ob 4% Oo8% od 10% None of the above
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