What is present value of growth opportunities

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Reference no: EM132052888

A firm’s management reinvest 60% of its earnings in projects that provide an ROE 10%, despite the fact that firm’s capitalization rate is 15%. The firm’s year-end dividend will be $2 per share, paid out of earnings of $5 per share. At what price will the stock sell? What is the present value of growth opportunities?

Reference no: EM132052888

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