c)Assuming that ROCE (return on common equity),
g (the growth rate of the book value of common shareholders’
equity) and rE (the cost of equity capital) are constant, that
markets are efficient, and:the company’s dividend payout ratio d
is 20%,g is 8%,the company’s stock has an equity beta of 1.2,the
risk free rate is 1% and the market risk premium is 6%,
what is the ROCE priced into the market?
Continuing with the information given in part (c), what will...