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Allushta [10]
3 years ago
14

The risk-free rate of return is 10.5%, the expected rate of return on the market portfolio is 17%, and the stock of Xyrong Corpo

ration has a beta coefficient of 1.5. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced were $13 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 24% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock
Business
1 answer:
nadezda [96]3 years ago
5 0

Answer:

$88.24

Explanation:

The computation of the  intrinsic value of a share of Xyrong stock is shown below;

k = risk free rate of retunr+ beta[expected market rate of return - risk free rate of return]

= 10.5% + 1.5(17% - 10.5%)

= 20.25%  

Now

growth rate = b × ROE

= .5 × 24%

= 12%

Now the intrinsic value of the stock is

= (($13 × 50%)  × (1 + 0.12)) ÷ (0.2025 - 0.12)

= $88.24

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Answer:

See explaination for the details of the answer.

Explanation:

1) Increase

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4) Decrease

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According to this law, employers (public and private) are prohibited from paying differentiated salaries based on sex in jobs that require equal skills, effort and responsibilities, and that are performed under similar working conditions.

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