Rose hill trading company is expected to have eps in the upcoming year of $6. the expected roe is 18%. an appropriate required return on the stock is 14%. if the firm has a plowback ratio of 70%, its intrinsic value should be b. $128.57.
A metric of financial performance known as return on equity (ROE) is obtained by dividing net income by shareholders' equity. ROE is referred to as the return on net assets since shareholders' equity is determined by subtracting a company's debt from its assets.
ROE is regarded as a barometer of a company's profitability and how well it produces profits. The management of a firm is more effective at generating income and growth from its equity financing the higher the ROE.
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