Calculate stock price based on residual income model

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Reference no: EM131551551

ABC Inc. made $1.00 net income per share last year and paid out $.30 in dividend. The company had a book value (or equity) per share of $10. The required rate of return is 12% for the stock.

• What’s the company’s ROE?

• What’s the residual income last year?

• Calculate the stock price based on Residual Income Model.

Reference no: EM131551551

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