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Suppose that the consensus forecast of security analysts of your favorite company is that earnings next year will be $5.00 per share. The company plows back 50% of its earnings and if the Chief Financial Officer (CFO) estimates that the company's return on equity (ROE) is 16%. Assuming the plowback ratio and the ROE are expected to remain Constant forever: If you believe that the company's required rate of return is 10%, what is your estimate of the price of the Company's stock?​

User Matthew Turland
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17 votes

Answer:

250

Step-by-step explanation:

User Patrick McElhaney
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