ZuoTi.Pro
Question

This year a firm had an Earning of $30 million with 800,000 outstanding share. What is...

This year a firm had an Earning of $30 million with 800,000 outstanding share. What is the P/E multiple of this firm assuming that it retains 40% of its earning, has a 4% growth rate in dividends; and a required rate of return on the firm’s equity of 8.5%?

A. 11.44

B. 12.69

C. 13.87

D. 14.30

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)

All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
This year a firm had an Earning of $30 million with 800,000 outstanding share. What is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Similar Homework Help Questions

  • A firm has the following capital structure: 100 million shares outstanding, trading at £1.5 per share,...

    A firm has the following capital structure: 100 million shares outstanding, trading at £1.5 per share, and £100 million of debt. The beta of the firm’s stock is 1.5. The firm’s cost of equity is 10 percent, and the yield on riskless bonds is 2.5 percent. There is no tax. Assuming that the firm can borrow at the risk free rate and that both CAPM (Capital Asset Pricing Model) and the Modigliani-Miller theorem hold, answer the following questions. i) What...

  • Question 1 Amy Nelson, CFA, has collected the following data about the firm: EBITDA = $3.5...

    Question 1 Amy Nelson, CFA, has collected the following data about the firm: EBITDA = $3.5 million Tax rate = 38% Debt outstanding = $2.5 million Cost of debt = 10.5% Cost of common equity = 14% Shares of stock outstanding = 1,000,000 BV of the stock per share = $12 The firm’s product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends. Calculate the firm’s net income and EPS, assuming...

  • Estimating Growth A firm has a constant dividend payout ratio. Last year the firm had net...

    Estimating Growth A firm has a constant dividend payout ratio. Last year the firm had net income of $30 million and paid out dividends of $6 million. The firm's return on equity is expected to be 13% for the foreseeable future. This stock's growth rate in dividends (g) should be

  • A firm has the following capital structure: £100 million of equity (market value) with 100 million...

    A firm has the following capital structure: £100 million of equity (market value) with 100 million shares outstanding, and £100 million of debt. The beta of the firm’s stock is 1.6. The firm’s cost of equity is 10 percent, and the yield on riskless bonds is 2 percent. There is no tax. Assuming that the firm can borrow at the risk-free rate and that both CAPM (Capital Asset Pricing Model) and the Modigliani-Miller theorem hold, answer the following questions. i)...

  • 1. A firm is considering selling $30 million worth of 30-year, 9% coupon bonds with a par-value o...

    1. A firm is considering selling $30 million worth of 30-year, 9% coupon bonds with a par-value of $1,000. Because bonds with similar risk earn a return greater than 9%, the firm must sell the bonds for $980 to compensate for the lower coupon interest rate. The flotation costs are 3% of par. The firm is also considering an issuance of 300,000 shares of 10% preferred stock that they expect to sell for $82 per share. The cost of issuing...

  • Scana Company earned $2.92 million for the fiscal year ending yesterday. The firm also paid out...

    Scana Company earned $2.92 million for the fiscal year ending yesterday. The firm also paid out 40 percent of its earnings as dividends yesterday. The firm will continue to pay out 40 percent of its earnings as annual, end-of-year dividends. The remaining 60 percent of earnings is retained by the company for use in projects. The company has one million shares of common stock outstanding. The current stock price is $32. The historical return on equity (ROE) of 14 percent...

  • a) Lockhart’s Bookstores is trading at $54 per share. There are 280 million shares outstanding. what...

    a) Lockhart’s Bookstores is trading at $54 per share. There are 280 million shares outstanding. what is the market capitalization of the company?    b) The MedTech company recently reported net profits after taxes of $15.8million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $ 1 million per year. compute the firm’s earnings per share (EPS)     (II) Assuming that the stock currently trades at $60 per share, determine what the firm’s dividend yield...

  • c) A firm has the following capital structure: £100 million of equity (market value) with 100...

    c) A firm has the following capital structure: £100 million of equity (market value) with 100 million shares outstanding, and £100 million of debt. The beta of the firm’s stock is 1.6. The firm’s cost of equity is 10 percent, and the yield on riskless bonds is 2 percent. There is no tax. Assuming that the firm can borrow at the risk free rate and that both CAPM (Capital Asset Pricing Model) and the Modigliani-Miller theorem hold, answer the following...

  • A company currently retains 40% of its earnings, which amounts to R6 per share this year....

    A company currently retains 40% of its earnings, which amounts to R6 per share this year. It earns an ROE of 30%. Assuming a required rate of return of 16%, how much would you pay for shares in the company on the basis of the earning multiplier model?

  • For a firm that expects earnings next year of $10.00 per share, has a plowback ratio...

    For a firm that expects earnings next year of $10.00 per share, has a plowback ratio of 35%, a return on equity of 20%, and a required return of 15%. a. Calculate the sustainable growth rate of the firm (Already calculated to be 7%) b. Calculate the current stock price and next year's expected stock price assuming that the growth rate is constant. (Already calculated current to be $81.25) c. Redo the calculation if the growth of the company's dividends...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT