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Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share wit plowback ratio of 40% which is common for the industry. It is also known that, on average, 75% of the price for companies in this industry is paid by the investors for the present value of growth opportunit (PVGO). The estimated fair value per share for the company stock if the required return is 12% per ann closest to O a. $15.6 O b. $14.7 O c. $20.5

Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share wit plowback ratio of 40% which is common for the industry. It is also known that, on average, 75% of the price for companies in this industry is paid by the investors for the present value of growth opportunit (PVGO). The estimated fair value per share for the company stock if the required return is 12% per ann closest to O a. $15.6 O b. $14.7 O c. $20.5

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 9MC
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Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share with a plowback ratio of 40% which is common for the industry. It is also known that, on average, 75% of the stock price for companies in this industry is paid by the investors for the present value of growth opportunities (PVGO). The estimated fair value per share for the company stock if the required return is 12% per annum is closest to O a. $15.6 O b. $14.7 O c. $20.5 O d. $12.6
Transcribed Image Text:Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share with a plowback ratio of 40% which is common for the industry. It is also known that, on average, 75% of the stock price for companies in this industry is paid by the investors for the present value of growth opportunities (PVGO). The estimated fair value per share for the company stock if the required return is 12% per annum is closest to O a. $15.6 O b. $14.7 O c. $20.5 O d. $12.6
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