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A firm is scheduled to earn $3.34 per share over the next year. Since the firm has an ROE of 13.9%, which is greater than the capitalization rate of 8.21% estimated using CAPM, management has decided to reinvest 27% of the firm's earnings back into the firm in order to generate future growth. Whatever the firm does not reinvest into the business it pays as dividends to shareholders. Calculate the forward P/E for the firm.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92849345

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