Calculate the companys growth rate of eps

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Question: Bob's Rawhide Company has a dividend payout ratio of 45%. Next year, it will earn $.075 per share and have a return on equity of 12%. The shareholders' required return is 8%.

Calculate the company's growth rate of EPS.

Using the earnings model, what is the value of the stock?

Construct a data table that shows how the growth rate and value of the stock will change if the ROE ranges between 10% and 20%, in 1% increments. Now, using that data, submit a scatter chart to show the relationship between the value of the stock and the ROE. Is the relationship linear? At what point does the model break down?

Using the constant-growth model, what is the value of the stock?

Reference no: EM133715724

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