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Calculate the market capitalization rate

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Question - Today is January 1st, 2016. Fabregas, Inc. is projecting earnings per share (EPS) of $4.50 for January 1st, 2017. It plans to pay out 25% of its earnings in dividends, and management is confident that its ROE of 10.5% on new investments can be maintained over a reasonably long horizon.

The expected market return is 7%, Fabregas, Inc. has a Beta of 1.3, and the risk-free rate is 0.5%. For Fabregas, Inc. calculate the market capitalization rate, the growth rate of earnings, and today's price and P-E ratio.

Reference no: EM132820612

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