A Firm Has a Current Book Value Per Share of $21.10

question 1

Multiple Choice

A firm has a current book value per share of $21.10 and a market price per share of $37.57. Next year's earnings are expected to be $5.60 per share and the expected earnings growth rate is 2.5 percent. What is the required rate of return on this stock?

• A)14%
• B)15%
• C)16%
• D)17%
• E)18%

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