Calculate the justified leading P-E Ratio of Stock

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Reference no: EM131966884

Stock XYZ has a ROE of 10% and a dividend payout ratio of 80%. The firm has a beta of 1.3. Assume an equity risk premium of 6% and a risk free rate of 2.5%.

Calculate the justified leading P/E Ratio of Stock XYZ using the constant growth dividend discount model.

Reference no: EM131966884

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