subject
Business, 23.06.2020 23:01 Kaycieb

Assume the​ following: bulletthe​ investor's required rate of return is 18 ​percent, bulletthe expected level of earnings at the end of this year ​(Upper E 1​) is ​$10​, bulletthe retention ratio is 55 ​percent, bullet the return on equity ​(ROE​) is 18 percent​ (that is, it can earn 18 percent on reinvested​ earnings), and bulletsimilar shares of stock sell at multiples of 5.556 times earnings per share. A. Determine the expected growth rate for dividends. B. Determine the price earnings ratio​(P​/Upper E 1​). C. What is the stock price using the​ P/E ratio valuation​ method?D. What is the stock price using the dividend discount​ model?E. What would happen to the ​P/E ratio ​(P​/Upper E 1​) and stock price if the firm could earn 25 percent on reinvested earnings ​(ROE​)? F. What does this tell you about the relationship between the rate the firm can earn on reinvested earnings and ​P/E​ ratios?

ansver
Answers: 3

Another question on Business

question
Business, 21.06.2019 20:30
Which of the following mechanisms would be most likely to motivate managers to act in the best interests of shareholders? a) decrease the use of restrictive covenants in bond agreements, b) take actions that reduce the possibility of a hostile takeover, c) elect a board of directors that allows managers greater freedom of action, d) increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries, e) eliminate a requirement that members of the board directors have a substantial investment in the firm's stocks
Answers: 2
question
Business, 21.06.2019 21:00
Intronix uses copy editors, computer graphics specialists, and java programmers to produce ads for magazines and the internet. the average new ad for magazines typically requires 180 hours of a copy editor's time and 135 hours of a computer graphics specialist's time, whereas ads produced for the internet require 35 hours of copy editor time, 195 hours of computer graphics time, and 60 hours of a java programmer's time. lassie food, a dog food manufacturer, has hired intronix to produce ads in the next four week. although currently it considers magazine ads 3 times more valuable than internet ads, it still wishes to have at least 2 of each produced within the next four weeks. intronix has assigned up to 3 copy editors, 4 computer graphics specialists, and 1 java programmer, each committed to work up to 70 hours per week on the project. how many of each type of ad should be produced to maximize the overall value to lassie foods
Answers: 3
question
Business, 22.06.2019 05:00
Identify an organization with the low-total-cost value proposition and suggest at least two possible measures within each of the four balanced scorecard perspectives.
Answers: 3
question
Business, 22.06.2019 15:50
Singer and mcmann are partners in a business. singer’s original capital was $40,000 and mcmann’s was $60,000. they agree to salaries of $12,000 and $18,000 for singer and mcmann respectively and 10% interest on original capital. if they agree to share remaining profits and losses on a 3: 2 ratio, what will mcmann’s share of the income be if the income for the year was $15,000?
Answers: 1
You know the right answer?
Assume the​ following: bulletthe​ investor's required rate of return is 18 ​percent, bulletthe...
Questions
question
Mathematics, 24.02.2021 02:30
question
Mathematics, 24.02.2021 02:30
question
Health, 24.02.2021 02:30
question
English, 24.02.2021 02:30
question
English, 24.02.2021 02:30
question
Physics, 24.02.2021 02:30