C. Question #4 (14) XYZ Corporation's shares trade for $32.98 each. XYZ typically reinvests 20%...
70.2K
Verified Solution
Link Copied!
Question
Finance
C. Question #4 (14) XYZ Corporation's shares trade for $32.98 each. XYZ typically reinvests 20% of its earnings. These re- investments get a rate of return of 24%. Shares of XYZ have a market capitalization rate of 12.2%. a. What is the coming year's earnings per share? [4] b. What is the dividend expected to be in one year? [2] What amount of the share price is attributed to future growth (NPVGO)? [4] d. XYZ's R&D team is good at finding high return projects. These prime projects, which are the best the R&D team has found, have an ROE of 24%. The R&D team has also found other projects to invest in. However, these projects aren't as good, only having an ROE of 18%. What would the share price be if the firm re-invested an extra 10% of its earning into these lower quality projects? (The first 20% of earnings re-invested will still be invested in projects yielding 24%). [4]
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
