Everythign is right excpet i cant get 20% PVGO Metatrend\'s stock will generate
ID: 2760125 • Letter: E
Question
Everythign is right excpet i cant get 20% PVGO
Metatrend's stock will generate earnings of $6 per share this year. The discount rate for the stock is 10%, and the rate of return on reinvested earnings also is 10%. Find both the growth rate of dividends and the price of the stock if the company reinvests the following fraction of its earnings in the firm: (i) 0%; (ii) 20%; (iii) 40%. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter the growth rates as a whole percent.) Redo part (a) now assuming that the rate of return on reinvested earnings is 15%. What is the present value of growth opportunities (PVGO) for each reinvestment rate? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.)Explanation / Answer
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