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Company Q's current return on equity (ROE) is 13%. The firm pays out 45 percent of its earnings as cash dividends. (payout ratio = .45). Current book value per share is $53. Book value per share will grow as Q reinvests earnings.
Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 11.0% and the payout ratio increases to .70. The cost of capital is 11.0%.
a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Years EPS Dividends
1
2
3
4
b. What is Q's stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Can you please help with identifying what the financial risks of conducting business internationally is and also, describe the significance of foreign exchange rate risk and how this risk can be mitigated?
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Zero coupon bonds pay the investor the face value on the maturity date. What is the implicit interest in the first year of the? bond's.
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