Whats the sustainable growth rate

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Reference no: EM13883200

Abbott Lab made $2.80 net income per share last year and paid out $1.30 in dividend. The company had a book value (or equity) per share of $20. The market has a risk free rate of 3.1% and market return 11.1%. Abbott has a historical beta of .90.

What’s the company’s ROE?

What’s the sustainable growth rate?

What’s the discount rate using CAPM?

Calculate the stock price for Abbott based on Residual Income Model.

Reference no: EM13883200

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