Question: Problem 3: The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year If this year's year-end dividend is $8 and

Problem 3: The FI Corporation's dividends per share are expected to

Problem 3: The FI Corporation's dividends per share are expected to grow indefinitely by 5% per year If this year's year-end dividend is $8 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM? (10 points) a. b. If the expected earnings per share are S12, what is the implied value of the ROE on future investment opportunities? (10 points) c. How much is the market paying per share for growth opportunities(i.e., for an ROE on future investments that exceeds the market capitalization rate)? (10 points)

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