1. OAB company intends to distribute dividends to its stockholders amounting to BD12 per share next year. The amount represents 15% return of investor’s money. However, the company as part of its strategy, plow 40% of its earnings back to the company’s return on equity of 25%. Determine the value of the stock before plow-back and the value after plow-back.

Answer rating: 100% (QA)

Solution To determine the value of the stock before plowback we need to calculate the present value ... View the full answer