g = 0.10(1 - 0.86)
= 0.10(0.14)
= 0.014, or 1.4% expected annual growth rate
How do I solve this? A formula?
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Chris’ Crushed Ice (CCI) is currently trading at a stock price of $43.55. CCI is expected to generate a return on equity (ROE) of 10% forever. CCI expects to pay out 86% of its earnings each year in dividends. How fast is CCI expected to grow going forward?
