WilliamsF1 just paid a $2.20 dividend but predicts it will be in trouble over the next 5 years with an RoE of 2.5%, and a reinvestment rate of 40%. Analysts predict this bad growth period will linearly increase over the 5 year period to an improved level, with RoE of 24.5% and a reinvestment rate of 40%. If the cost of equity for WilliamsF1 is 13.34%, what is the implied intrinsic value of equity?
WilliamsF1 just paid a $2.20 dividend but predicts it will be in trouble over the next 5 years with an RoE of 2.5%, and a reinvestment rate of 40%. Analysts predict this bad growth period will linearly increase over the 5 year period to an improved level, with RoE of 24.5% and a reinvestment rate of 40%. If the cost of equity for WilliamsF1 is 13.34%, what is the implied intrinsic value of equity?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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WilliamsF1 just paid a $2.20 dividend but predicts it will be in trouble over the next 5 years with an
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