Joker stock has a sustainable growth rate of 10 percent, ROE of 19 percent, and
ID: 2612955 • Letter: J
Question
Joker stock has a sustainable growth rate of 10 percent, ROE of 19 percent, and dividends per share of $1.60. If the P/E ratio is 16.5, what is the value of a share of stock? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Joker stock has a sustainable growth rate of 10 percent, ROE of 19 percent, and dividends per share of $1.60. If the P/E ratio is 16.5, what is the value of a share of stock? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Explanation / Answer
Dividend (D0) 1.6 Dividend (D1) 1.6*(1+0.10) 1.76 ROE 19% growth 10% Value of Stock : DPS/(RR-g): 1.76/(0.19-0.10) 19.56
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