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0.25 Return on equity ack ratio 0.5 The ratio of retained earnings over net income 0.5 The ratio of dividends paid over net income 0.125 Sustainable growth rate = ROE * plowback ratio t ratio $4 $2 0.2 $ 30.00 al Motors is considering the share price impact of a reduction in plowback ratio to 0.30 starting in year 6 onward. Use a template calculate the price impact of 0.2 ack, 0.3 Plowbackai to s remains @ 0.5 0.7 Payout to 5 remains @ 0.5 Knew tws and onward new te6 and onward

0.25 Return on equity ack ratio 0.5 The ratio of retained earnings over net income 0.5 The ratio of dividends paid over net income 0.125 Sustainable growth rate = ROE * plowback ratio t ratio $4 $2 0.2 $ 30.00 al Motors is considering the share price impact of a reduction in plowback ratio to 0.30 starting in year 6 onward. Use a template calculate the price impact of 0.2 ack, 0.3 Plowbackai to s remains @ 0.5 0.7 Payout to 5 remains @ 0.5 Knew tws and onward new te6 and onward

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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use EXCEL and provide Cell References for Calculations. 

Stock valuation with two-stage growth tied to plowback policy Current ROE Plowback ratio 0.25 Return on equity 0.5 The ratio of retained earnings over net income Payout ratio 0.5 The ratio of dividends paid over net income 0.125 Sustainable growth rate = ROE * plowback ratio EPS, DIV. $4 $2 r 0.2 P. $ 30.00 General Motors is considering the share price impact of a reduction in plowback ratio to 0.30 starting in year 6 onward. Use a template calculate the price impact of such as policy change. ROE Plowbacknew tuố and onward 0.2 0.3 Plowback,el to 5 remains @ 0.5 Payoutnewt=6 and onward 0.7 Payout to 5 remains @ 0.5 Calculate the price impact of reducing plowback ratio to 0.3 starting in year 6 onward.
Transcribed Image Text:Stock valuation with two-stage growth tied to plowback policy Current ROE Plowback ratio 0.25 Return on equity 0.5 The ratio of retained earnings over net income Payout ratio 0.5 The ratio of dividends paid over net income 0.125 Sustainable growth rate = ROE * plowback ratio EPS, DIV. $4 $2 r 0.2 P. $ 30.00 General Motors is considering the share price impact of a reduction in plowback ratio to 0.30 starting in year 6 onward. Use a template calculate the price impact of such as policy change. ROE Plowbacknew tuố and onward 0.2 0.3 Plowback,el to 5 remains @ 0.5 Payoutnewt=6 and onward 0.7 Payout to 5 remains @ 0.5 Calculate the price impact of reducing plowback ratio to 0.3 starting in year 6 onward.
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