You have been asked to estimate the PE ratio for a firm having the following characteristics: length of super normal growth is 5 years, growth rate in first 5years= 25%, stable growth rate 5 years=8%, beta =1.0, treasury bond rate =6%, risk premium=5.5%, payout ratio in first 5 years=20%, payout ratio after 5 years=50%. Also compute ROE in stable growth period.
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Hello mate...
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I don't know sorry....
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