What is the reinvestment rate

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Question - There is a firm with an estimated (till end of this year) net profit of $5 per share and a 40 percent dividend tendency. The net return on assets is 5%, debt ratio is 70%, and shareholder demand return is 15%. This situation is considered to continue.

1. What is the reinvestment rate?

2. What is the intrinsic value?

3. Assuming that market value is the same as intrinsic value, what is the expected PER at the end of this year?

4 If the net return on equity is 10% per year, what is the intrinsic value of this company?

Reference no: EM132210964

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