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Joker stock has a sustainable growth rate of 8 percent, ROE of 14 percent, and dividends per share of $ 1.65. If the P/E ratio is 19, what is the value of a share of stock?

Formulas:
Sustainable growth rate = ROE x retention ratio
ROE = net income / book equity
Payout ratio = Dividends per share / EPS
Retention ratio = 1 - payout ratio
Sustainable growth rate = ROE x (1 - Payout Ratio)

Please show the steps used in the calculations of the answer ...especially how you determined the EPS.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M928937

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