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Riskfree rate 0.02                      Market rate 0.15 1. Use the information below and the Combined Dividends &...

Riskfree rate 0.02                      Market rate 0.15

1. Use the information below and the Combined Dividends & Earnings Model to find ABB’s value. (Remember that the EPS and dividend for t+1 are given.)

t+1

t

t-1

t-2

t-3

EPS

$1.50

Dividend

1.01

DPO

0.74

0.69

0.60

ROE

0.15

Beta

1.10

P/E

19.2

23.5

22.9

Shares outstanding

2,130

mill

2. Use the info below and the CD&E model to find ArcBest’s value.

t+1

t

t-1

t-2

t-3

EPS

$4.15

Dividend

0.25

DPO

0.08

0.08

0.08

ROE

0.125

Beta

1.7

P/E

10.4

20.5

22.1

Shares outstanding

530

mill

Solutions

Expert Solution

jeff jeffy answered 3 years ago
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