Bad Blood has an ROE of 10%, a beta of 1.25, and traditionally its plowback ratio...

Bad Blood has an ROE of 10%, a beta of 1.25, and traditionally its plowback ratio is 2/3. This year’s earnings are $4 per share and the current year dividend has been paid. Investors expect next year’s market to return 12% and the risk free rate is 6%. 6 pts

a. What is the price that Bad Blood should sell at?

b. What is Bad Blood’s ROE?

c. Calculate the present value of growth opportunities.

Expert Solution

jeff jeffy answered 2 years ago

bad blood has an ROE of 10%, a beta of 1.25, and traditionally its plowback ratio...

bad blood has an ROE of 10%, a beta of 1.25, and traditionally its plowback ratio is 2/3. This years earnings are $4 per share and the current year dividend has been paid. investors expect next years markst to return to 12% and risk free rate of 6% what is the price that bad blood should sell at? what is bad bloods ROE? calculate the present value of growth opportunites.

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