The stock of Pear Computer (PC) is currently selling for $100, its earnings per share...
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The stock of Pear Computer (PC) is currently selling for $100, its earnings per share for the coming year are expected to be $6, and its current book value per share is $40. Furthermore, the company intends to maintain its current payout ratio of 0.50 forever. Calculate: a. The required rate of return on the PC stock. b. The beta of the company, if the risk-free rate and the market return are, respectively, 6 percent and 9 percent. c. The new share price of the company if the payout ratio now rises to 0.60 and the beta changes to 2.0
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