복사본 RelativeResourceManager

복사본 RelativeResourceManager

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
No growth (no plowback) plowback ratio Book equity book equity earning div growth ROE payout ratio cost of capital EPS 100 100 10 10 10% 100% 10% 10 100 100 10 10 0 100 100 10 10 0 100 100 10 10 0 100 100 10 10 0 100 100 10 10 0 100 100 10 10 0 100 100 10 10 0 100 100 10 10 0 when roe<r, then p<BE when payout ratio=100%, then div is constant when payout ratio<100%, then div grow at a rate of ROE(1-payout) Price of the sto 100 when roe>r and payout<1, then price increases as payout decreases
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: when roe=r and payout&lt;1, then pricedoes not change 0.0343902439 Be careful not to equate firm performance with the growth in EPS. A company that reinvests earning at below the market capitalization rate r may increase earning but will reduce the share value...
View Full Document

Ask a homework question - tutors are online