Question

INR Ltd’s earnings per share next year is expected to be $2.20 and the earnings are expected to grow at 5% p.a. for the foreseeable future. Its required rate of return on equity has been estimated to be 9% p.a. The company has a policy of reinvesting 40% of its earnings. The present value of the company's growth opportunities is closest to:

Answer #1

RNN Ltd’s earnings per share next year is expected to be $2.00
and the earnings are expected to grow at 5% p.a. for the
foreseeable future. Its required rate of return on equity has been
estimated to be 8% p.a. The company has a policy of reinvesting 40%
of its earnings. The present value of the company's growth
opportunities is closest to:
Group of answer choices $15.00 $16.70. $41.70. $25.00.

Market analysts expect the earnings per share of Dazza Corp to
be $2.00 next year. The earnings per share are expected to grow at
8% p.a. forever and the firm typically retains 80% of its earnings.
Analysts believe that this policy will continue in the foreseeable
future. If investors require a return of 12%, the company's
expected (or forward) price-to-earnings ratio will be
closest to:
Group of answer choices
20.00.
5.00.
6.70.
10.00.

Apple Inc. has expected earnings of $6 per share for next year.
The company's return on equity ROE is 20% and its earnings
retention ratio is 70%. If the company's market capitalization rate
is 15%, what is the present value of its growth opportunities if
the company's expected P/E ratio is 30?

An equity analyst is estimating PLK Ltd’s share price at the end
of four years from today. The company has recently paid a
dividend of $1.30 which is expected to grow at 4% p.a. over the
foreseeable future. If the company’s required rate of return on
equity is 10% the analyst’s price estimate at the end of year 4
will be closest to:
Group of answer choices
$21.70.
$25.35.
$26.40.
$22.50.

TMD Ltd is expected to pay a dividend of $1.00 per share next
year and market analysts expect
this dividend to grow at 12% p.a. the following year, 10% p.a.
the year after that, 8% p.a. the
year after that, before stabilizing at 6% p.a. for the
foreseeable future. If the required return on
these shares is 8% the share price today should be closest
to:
a) $51.83.
b) $55.68.
c) $56.52.
d) $70.52

A.
Growth and Value A firm has projected earnings
of $6 per share for next year and has a 30% dividend payout ratio.
The firm's required return is 13%. The firm's ROE is 14%. What is
the intrinsic value of the stock?
$56.25
$54.33
$50.77
$49.65
B.
Value of Growth Opportunities A firm has
projected annual earnings per share of $4.00 and a dividend payout
ratio of 60%. The firm's required return is 11% and dividends and
earnings are expected...

ABC Corporation expects to pay a dividend of $2 per share next
year, and the dividend payout ratio is 80 percent. Dividends are
expected to grow at a constant rate of 8 percent forever.Suppose
the company's equity beta is 1.21, the market risk premius is 9%,
and the risk free rate is 5%. Calculate the present value of growth
opportunities.

ABC Corporation expects to pay a dividend of $2 per share next
year, and the dividend payout ratio is 80 percent. Dividends are
expected to grow at a constant rate of 8 percent forever.Suppose
the company's equity beta is 1.21, the market risk premius is 9%,
and the risk free rate is 5%. Calculate the present value of growth
opportunities.

Abel, Inc., has expected earnings of $3 per share for next year.
The firm's ROE is 20%, and its earnings retention ratio is 50%. If
the firm's market required rate on the stock is 15%, what is the
present value of its growth opportunities?
A. Less than $12
B. Higher than $12 but less than $15
C. Higher than $18 but less than $20
D. Higher than $22

ELE Ltd’s total earnings last year was $25 million and this year
is $26.25 million, which is in line with its long-term earnings
growth rate. There are 4 million shares outstanding, and the
company follows a policy of retaining 30% of its earnings.
Calculate the company’s expected dividend per share next year. Show
all calculations.

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