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Discuss three usefulness of balance sheets in estimating

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Reference no: EM133004665

Problem 1: A company is expanding into a new product range. Current earnings per share is £6. In the coming year the growth rate before the new product range was expected at 6%, annually. With the new investment the growth rate is expected to increase to 8.4%. To finance this investment the payout would need to be cut from 96% to 60%. Equity cost of capital is 13.2% and is expected to remain unchanged. Discuss three (3) usefulness and three (3) limitations of balance sheets in estimating a firm's value.

Reference no: EM133004665

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