Solved: Explain investors willingness to pay a price, Finance Basics

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Explain investors willingness to pay a price

Question:

Reedsburg Associates is currently paying a dividend of $ 0.40 per share on earnings of $ 4 per share. Its stock is selling for $200 per share. Stocks of similar risk are priced to return 15%. What kind of return on equity could explain investors' willingness to pay a price equal to 50 times earnings on this stock?

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Finance Basics: Explain investors willingness to pay a price

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Finance Basics: Explain investors willingness to pay a price

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