Your firm is expected to earn $1.51/share next year and has a cost of capital of...
Your firm is expected to earn $1.51/share next year and has a cost of capital of 14.2%. Assume these earnings resemble a perpetuity with growth rate 4.1%. What is its price/earnings ratio?
Carry out calculations to at least 4 decimal places. Enter percentages as whole numbers. Example: 3.03% should be entered as 3.03. Do not include commas or dollar signs in numerical answers.
Homework Answers
Current price=D1/(Cost of capital-Growth rate)
=1.51/(0.142-0.041)
=$14.9505
Hence price/earnings ratio=Market price/EPS
=$14.9505/$1.51
=9.9010(Approx).
Add Answer to:
Your firm is expected to earn $1.51/share next year and has a
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Please answer them Carry out calculations to at least 4 decimal places. Enter percentages as whole...
Please answer them Carry out
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Carry out calculations to at least 4 decimal places. Enter
percentages as whole numbers. Example: 3.03% should be entered as
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answers.
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include commas or dollar signs in numerical answers.
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include commas or dollar signs in numerical answers.
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