FTB has a book value per share of $6. They expect EPS to remain constant at $0.60 per share forever and their dividend payout ratio is 100%. Their ROE is 12%. Calculate the value of the stock using the following: Dividend discount model Residual income model

FTB has a book value per share of $6. They expect EPS to remain constant at $0.60 per share forever and their dividend payout ratio is 100%. Their ROE is 12%. Calculate the value of the stock using the following: Dividend discount model Residual income model

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 16P: Crisp Cookware’s common stock is expected to pay a dividend of $3 a share at the end of this year...

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Question

FTB has a book value per share of $6. They expect EPS to remain constant at $0.60 per share forever and their dividend payout ratio is 100%. Their ROE is 12%. Calculate the value of the stock using the following: