Illustrate what is the return on equity of the organization

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Reference no: EM1396276

Q. It is January 1, 2003. Industry X is expected to have earnings of $ 10 million for the year which are realized exactly one year from today. The payout ratio for the organization has historically been 40% also is not expected to change into the future. Earnings are expected to grow at 6% per year. The risk free rate is 6% also the return on the market portafolio is 6%. If Industry X is valued at $ 80 million,

a) Illustrate what is the return on equity of the organization? also,

b) Illustrate what is the beta of the organization?

Reference no: EM1396276

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