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QUESTION
Can you answer this: Global Asset Federal Financial (GAFF) is expected to pay a dividend of $1.00 next year. Dividends are then expected to grow 4.5%...
Can you answer this:
Global Asset Federal Financial (GAFF) is expected to pay a dividend of $1.00 next year. Dividends are then expected to grow 4.5% a year for the foreseeable future. GAFF’s beta is 0.8, the risk-free rate is 2% and the market risk premium is 6%.A) What is today’s expected price when using the Dividend Discount Model?B) If GAFF’s payout ratio is 70%, what is GAFF’s ROE?C) How much of the price in A is due to growth opportunities?
