Question: x Y earns $ 2 per share. It reinvests 4 0 percent ( b ) of it earnings at a return of 2 0 percent
earns $ per share. It reinvests percent of it earnings at a return of percent R per year The required rate of return is
a What is the price of the stock?
b Its premium for growth and PE ratio?
The company has come up with a new product which requires is to invest percent of its earnings at a return of percent per year for the next years. After that the company returns to its old policy ofr retaining percent of its earnings and investing them at percent per year.
c What is the new price of the stock?
d Its premium for growth and its PE ratio?
e How much of the premium is due to its growth of percent and how much is from its percent growth
Answer yhese questions with work shown unlike the other expert ill be reporting for not answering
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
