(Answered) The current risk free rate is 3 percent and the market risk

Economics

The current risk free rate is 3 percent and the market risk premium is 5 percent. You are trying to value ABC company and it has an equity beta of .9. The company earned $2.50 in the year that just ended. You expect the company's earnings to grow 4 percent per year. The company has an ROE of 12 percent.

a. What is the value of the stock?

b. What is the present value of the growth opportunity?

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Business Economics, Economics

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