A new all-equity financed company is expected to generate an ROE of 15% indefinitely. The current book value per share equals $30.

A new all-equity financed company is expected to generate an ROE of 15% indefinitely. The current book value per share equals $30. The required return on the stock equals 12% and it expects to grow at a constant rate of 5% forever. What is the value of the stock of the company? Which part of this value is due to growth and how can you explain the difference between the value of the stock and the book value per share? How would your answers change if theROE generated by the firm would equal 10%?