The growth in the firm is described by this relationship


1. A firm’s capitalization rate is 22%, while the firm invests in projects with ROE of 20%. The growth in the firm is described by this relationship:The firm’s year-end dividend will be $2 per share, while EPS is $5. What is the stock price?

a. 8

b. 20

c. 22

d. 25

2. What is the PV of opportunities?

a. 0

b. 2.50

c. 1.49

d. -2.73

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Financial Management: The growth in the firm is described by this relationship
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