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Home / Questions / MF Corp has an ROE of 12% and a plowback ratio of 50% If the coming years earnings are exp...

MF Corp has an ROE of 12% and a plowback ratio of 50% If the coming years earnings are expected to be $4 per share at what price will the stock sell The market capitalization rate is

MF Corp. has an ROE of 12% and a plowback ratio of 50%. If the coming year's earnings are expected to be $4 per share, at what price will the stock sell? The market capitalization rate is 14%. (Round your answer to 2 decimal places. Do not round intermediate calculations.)

Price:$_____

b.

What price do you expect MF shares to sell for in three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price: ______

I got the 1st question right, but i can't get the 2nd one. someone asked the same question before but the 2nd question answer is now 35.12

1st part:

growth rate = 12% * 0.5 = 6%

D1 = 4 * (1-0.5) = 2

price = 2/14% - 6% = 25

May 19 2020 View more View Less

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