Sisters Corporation expects to earn $7 per share next year. The firm’s ROE is 16% and its plowback ratio is 60%. The firm’s market capitalization rate is 10%. Required: a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.)   b. Calculate the price with no growth

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Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.