What formula would you use for this question?
Imagine a corporation with $1,000,000 of assets and a debt ratio of 40%. Roe (return on equity) is expected to be 20% for the foreseeable future. Assume the firm keeps the same amount of debt indefinitely (as opposed to keeping the same debt ratio).
a) What do you expect the firm's earning to be for the next 3 years if the firm doesn't pay out any dividends or re-purchase any shares?