Homework Answers
Expected growth rate = ROE*Retention ratio
= 15%*45%
= 6.75%
b.P/E Ratio = 7.096
c.Price = 14*7.096 = $99.344
d.Price = Expected Dividend/(Required return – Growth rate)
= 14*55%/(14.5%-6.75%)
= $99.3548 per share
Add Answer to:
(Common stock valuation) Assume the following the investor's required rate of return is 14.5 percent, the...
the investor's required rate of return is 13.5 percent the expected level of earnings at the end of this year (E1) s $6,...
the investor's required rate of return is 13.5 percent the expected level of earnings at the end of this year (E1) s $6, the retention ratio is 40 percent, the return on equity (ROE) is 13 percent (that is, it can earn 13 percent on reinvested earnings), and similar shares of stocks sell at multiples of 7.228 times earnings per share Questions a. Determine the expected growth rate for the dividends. b. Determine the price earnings ratio (P/E1) c. What...
i need e & f 1. Determine the price rangs ratio (PE) c. What is the...
i need e & f
1. Determine the price rangs ratio (PE) c. What is the stock price using the PE ratio valuation method d. What is the stock price using the dividend discount model? e. What would happen to the PE (PE) and stock price if the company increased s ertion als gs in the form of dividends? 1. What you learned about the relationship between the retention and the PE rabios? the dyin 10 percent poding second What...
PLEASE ASSIST WITH E and F Setup: *the investor's required rate of return is14 percent •the...
PLEASE ASSIST WITH E and F
Setup: *the investor's required rate of return is14
percent
•the expected level of earnings at the end of this year
(Upper E 1E1) is $14,
• the retention ratio is 35 percent,
• the return on equity (ROE) is
16 percent (that is, it can earn
16 percent on reinvested earnings), and
• similar shares of stock sell at multiples of 7.738
times earnings per share.
a. Determine the expected grth rate tor dividends....
(Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation,...
(Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: • the investor's required rate of return is 13 percent, • the expected level of earnings at the end of this year (E1) is $4, • the firm follows a policy of retaining 30 percent of its earnings, • the return on equity (ROE) is 15 percent, and • similar shares of...
Question 9: (10 points). (Relative valuation of common stock) Using the P/E ratio approach to valuation,...
Question 9: (10 points). (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions .the investor's required rate of return is 13 percent, the expected level of earnings at the end of this year (E1) is $8, the firm follows a policy of retaining 40 percent of its earnings, the return on equity (ROE) is 15 percent, and similar shares of stock sell at multiples of...
P10-12 (similar to) 3 Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) Using...
P10-12 (similar to) 3 Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: • the investor's required rate of return is 14 percent, • the expected level of earnings at the end of this year (E1) is $7, • the firm follows a policy of retaining 20 percent of its earnings, . the return on equity (ROE) is 13...
Assignment Stock Valuation 1. (Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling...
Assignment Stock Valuation 1. (Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of S2 30per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent. a. What is the value of the stock to you, given a 15percent requiredrate of rectum? b. Should you purchase this stock? 2. (Measuring growth) Thomas, Inc.'s return on equity is 13 percent and management has plans to...
(Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calcula...
(Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock ur following conditions: • the investor's required rate of return is 12 percent, . the expected level of earnings at the end of this year (E) is $8, • the firm follows a policy of retaining 40 percent of its earnings • the return on equity (ROE) is 12 percent, and Similar shares of stock sell...
P10-12 (similar to) Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) Using the...
P10-12 (similar to) Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions • the investor's required rate of return is 12 percent, • the expected level of earnings at the end of this year (E) is $8, • the firm follows a policy of retaining 40 percent of its earnings, • the return on equity (ROE) is 12 percent,...
2.8) What would be an investor's valuation of a stock with an expected annual dividend in...
2.8) What would be an investor's valuation of a stock with an expected annual dividend in one year of $1.10 if dividends are expected to grow at a constant rate of 10 percent over a long period of time (i.e. forever) and the investor's required return is 15 percent? a. $20 b. $11 c. $4.40 d) $7.33 e) $22
i need e & f
1. Determine the price rangs ratio (PE) c. What is the stock price using the PE ratio valuation method d. What is the stock price using the dividend discount model? e. What would happen to the PE (PE) and stock price if the company increased s ertion als gs in the form of dividends? 1. What you learned about the relationship between the retention and the PE rabios? the dyin 10 percent poding second What...
PLEASE ASSIST WITH E and F
Setup: *the investor's required rate of return is14
percent
•the expected level of earnings at the end of this year
(Upper E 1E1) is $14,
• the retention ratio is 35 percent,
• the return on equity (ROE) is
16 percent (that is, it can earn
16 percent on reinvested earnings), and
• similar shares of stock sell at multiples of 7.738
times earnings per share.
a. Determine the expected grth rate tor dividends....
(Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: • the investor's required rate of return is 13 percent, • the expected level of earnings at the end of this year (E1) is $4, • the firm follows a policy of retaining 30 percent of its earnings, • the return on equity (ROE) is 15 percent, and • similar shares of...
Question 9: (10 points). (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions .the investor's required rate of return is 13 percent, the expected level of earnings at the end of this year (E1) is $8, the firm follows a policy of retaining 40 percent of its earnings, the return on equity (ROE) is 15 percent, and similar shares of stock sell at multiples of...
P10-12 (similar to) 3 Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions: • the investor's required rate of return is 14 percent, • the expected level of earnings at the end of this year (E1) is $7, • the firm follows a policy of retaining 20 percent of its earnings, . the return on equity (ROE) is 13...
Assignment Stock Valuation 1. (Common stock valuation) Wayne, Inc.'s outstanding common stock is currently selling in the market for $33. Dividends of S2 30per share were paid last year, return on equity is 20 percent, and its retention rate is 25 percent. a. What is the value of the stock to you, given a 15percent requiredrate of rectum? b. Should you purchase this stock? 2. (Measuring growth) Thomas, Inc.'s return on equity is 13 percent and management has plans to...
(Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock ur following conditions: • the investor's required rate of return is 12 percent, . the expected level of earnings at the end of this year (E) is $8, • the firm follows a policy of retaining 40 percent of its earnings • the return on equity (ROE) is 12 percent, and Similar shares of stock sell...
P10-12 (similar to) Question Help (Related to Checkpoint 10.2) (Relative valuation of common stock) Using the P/E ratio approach to valuation, calculate the value of a share of stock under the following conditions • the investor's required rate of return is 12 percent, • the expected level of earnings at the end of this year (E) is $8, • the firm follows a policy of retaining 40 percent of its earnings, • the return on equity (ROE) is 12 percent,...
Most questions answered within 3 hours.
-
Question Three
Suppose you as project manager are using the Waterfall
development methodology on a large...
asked 30 minutes ago -
Which statement is not true about welfare in Canada?
A.Benefits typically vary based on one's ability...
asked 1 hour ago -
Please help me with FLOWCHART and UML diagram for class,
thank you!
#include <iostream>
#include <fstream>...
asked 1 hour ago -
3. Describe the “logic circuit” of the Lac operon. Which
proteins are bound or not to...
asked 1 hour ago -
Ayesha’s adjusted gross income is $60,000 in 2019. She donated a
piece of artwork with a...
asked 1 hour ago -
For Dijkstra’s shortest path algorithm:
a. Give the Big-O time for Dijkstra’s shortest path algorithm
and...
asked 2 hours ago -
Phosphorus violates the 'octet rule' in biological molecules,
forming more covalent bonds than expected based on...
asked 2 hours ago -
A 1.3 eV electron has a 10-4 probability of tunneling
through a 2.4 eV potential barrier....
asked 2 hours ago -
What is the one ingredient that is common to being successful
with all stakeholders?
profit
trust...
asked 2 hours ago -
Write an assembly language 32 bit program that reads in lines of
text by a .txt...
asked 2 hours ago -
what is the density ( in g/L) of hydrogen gas at 29 degrees C and a...
asked 2 hours ago -
5-6. You are considering three investment alternatives for some
spare cash: Old Reliable Corporation stock (A1),...
asked 2 hours ago