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After 4 years, this company is expected to growth a slower but constant growth rate. To...

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Finance

After 4 years, this company is expected to growth a slower butconstant growth rate. To estimate its sustainable growth rate (g),we figure out that its ROE will be 0.21 and its Dividend PayoutRatio will be 0.49. This company’s CAPM beta is 0.75. Assume thatrisk-free rate of return (Rf) is 0.016, and the market risk premium(i.e., Rm - Rf) is 0.07. How much should be this company’s stockprice today? TTAL corp has been growing at a fast growth rate. Itscash dividend in the next 4 years are expected to be: Div1 = $3.35;Div2 = $3.75; Div3 = $4.15; Div4 = $4.55.

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Can you please recheck the value of ROE If    See Answer
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