Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Loanable Funds Theory
The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curv…
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13

X-Ray Inc. recently paid its annual dividend of $4.80, and reported an ROE of 5%. The firm pays out 50% of earnings as dividends. Based on your analysis, you estimate that the stock has a required return of 7%. What is the intrinsic value of this stock? DO NOT ENTER THE $ SIGN. ALSO, ENTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e. IF YOUR ANSWER IS 33.4348 ENTER IT AS 33.48 ONLY
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Transcribed Image Text:X-Ray Inc. recently paid its annual dividend of $4.80, and reported an ROE of 5%. The firm pays out 50% of earnings as dividends. Based on your analysis, you estimate that the stock has a required return of 7%. What is the intrinsic value of this stock? DO NOT ENTER THE $ SIGN. ALSO, ENTER YOUR ANSWER AS A POSITIVE NUMBER. SET YOUR CALCULATOR TO 4 DECIMAL PLACES AND ROUND TO TWO DECIMAL PLACES AT THE END, i.e. IF YOUR ANSWER IS 33.4348 ENTER IT AS 33.48 ONLY
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