What is estimated intrinsic value per share

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Reference no: EM131905766

The Generic Genetic corporation pays no cash dividends currently and is not expected tp for the next 4yrs. Its latest EPS was $5 all of which was reinvested in the company.The firm's next expected ROE for the next 4years is 20% per year, during which time it is expected to continue to reinvest all its earnings. Starting year 5,the firm's expected ROE on new investments is expected to fall to 15% per year. GG's market capitalisation rate is 15% per year. a) What is GG's estimated intrinsic value per share? b) Assuming its current market price is equal to its intrinsic value, what do u expect to happen to price over the next year?

Reference no: EM131905766

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