Value of roe on future investment opportunities

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The XYZ Corporation’s dividends per share are expected to grow indefinitely by 6 percent per year.

a. If this year’s year-end dividend is $10 and the market capitalization rate is 11 percent per year, what must the current stock price be according to the DDM?

b. If the expected earnings per share are $16, what is the implied value of the ROE on future investment opportunities?

Reference no: EM131577368

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