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1. XYZ Company's earnings are $9 per share and the...




1. XYZ Company's earnings are $9 per share and the capitalization rate is 18%, assuming that the no-growth value of the firm is $50. The actual price of the stock is $40, implying that the present value of growth opportunity is -$10. The P/E ratio is ___________. a. 6.67 b. 3.99 c. 5.56 d. 4.44 2.The market capitalization rate for Admiral Motors Company is 8%. Its expected ROE is 10% and its expected EPS is $5.00. If the firm's plowback ratio is 60%, what will be its P/E ratio? 3.A company expects to pay dividend of $7 next year that is expected to grow at 6%. It retains 30% of earnings. The rate of return is 10%. Calculate the ROE and the amount that the company's stock should sell. a. 22%, $195.25 b. 16%, $165.98 c. 19%, $175.67 d. 20%, $175.00


Paper#6871 | Written in 18-Jul-2015

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