Asked by
nathan garcia
on Oct 19, 2024
Verified
ART has come out with a new and improved product. As a result, the firm projects an ROE of 25%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3 per share. Investors expect a 12% rate of return on the stock.
What price do you expect ART shares to sell for in 4 years?
A) $53.96
B) $44.95
C) $41.68
D) $39.76
ROE
Return on Equity, a measure of financial performance calculated by dividing net income by shareholder equity, indicating how effectively management is using a company’s assets to create profits.
- Investigate the impact of revenue growth, reinvestment percentages, and essential returns on market price and valuation analysis.
Verified Answer
YH
Learning Objectives
- Investigate the impact of revenue growth, reinvestment percentages, and essential returns on market price and valuation analysis.