Arizona State University FIN FIN 40628 Avnet is expected to earn $1.00 next year. Book equity per share is $10.00 now. Avnet plans an investment program which will increase net book assets…
$10.00 now. Avnet plans an investment program which will increase net book assets by 8% per year. Earnings are expected to grow proportionally. The investment is financed by retained earnings. The discount rate is 10%, which is assumed to be the same as the rate of return on new investments. Price Avnet’s share price if
A)Avnet does not expand.
B) Avnet expands at 8% forever.
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