Harvard Business School Finance Worksheet
Description
The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $19.50, all of which was reinvested in the company. The firms expected ROE for the next five years is 15% per year, and during this time it is expected to continue to reinvest all of its earnings. DEQSs Price Earnings Ratio is 5 and its market capitalization rate is 26% per year.
At the beginning of Year 2, DEQSs market price is $ 150 per share.
Is this stock a better long purchase for your portfolio or a sale or a short?? AND WHY?
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