Question

1. use the technique of stock valuation by multiples to find the approximate shoare price of...

1. use the technique of stock valuation by multiples to find the approximate shoare price of a stock that has current earnings of $2.14 per share given that similar stocks in its industry have an average current price to earnings ratio of 23.

2. Find the price of the following stock today. It is expected to pay out a dividend of $1.25 per share in one year. The expected stock price in one year is $34 per share and investors' expected return (also known as cost of equity and equity cost of capital is 9%.

Could you show in Excel with formulas?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Price of a share is equal to Earnings per share*Price earnings ratio

Price of share is equal to the present value of future dividends

Formulae are:

0 0
Know the answer?
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

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
use the technique of stock valuation by multiples to fine the approximate share price of a...
use the technique of stock valuation by multiples to fine the approximate share price of a stock that has a current earnings of $3.96 per share given that similar stocks in its industry have an average current price to earnings ratio of 20
The dividend discount valuation model equates the current stock price to: Select one: A. All future...
The dividend discount valuation model equates the current stock price to: Select one: A. All future expected dividends B. All future expected dividends discounted by the weighted average cost of capital C. All future expected dividends discounted by the cost of equity capital D. The current dividend divided by current earnings per share
Using the ​P/E ratio approach to​ valuation, calculate the value of a share of stock under...
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 ​$5​, • the firm follows a policy of retaining 20 percent of its​ earnings, • the return on equity ​(ROE​) is 15 ​percent, and • similar shares of stock sell at multiples of 7.272 times earnings per...
(Ordinary share valuation) Assume the following: • the investor’s required rate of return is 15% •...
(Ordinary share valuation) Assume the following: • the investor’s required rate of return is 15% • the expected level of earnings at the end of this year (E|) is $5.00 • the retention ratio is 50% • the return on equity (ROE) is 20% (i.e. it can earn 20% on reinvested earnings) • similar shares sell at multiples of 10 times earnings per share. Questions: (a) Determine the expected growth rate for dividends. (b) Determine the price/earnings ratio (P!E\) using...
Match each of the following items(1-5)on the left with related explanations(A-E) on the right 1. Multiples...
Match each of the following items(1-5)on the left with related explanations(A-E) on the right 1. Multiples approaches A. An amount inserted into balance sheet to ensure the balance sheet balances 2. Free cash flow B. A shortcut valuation technique that computes stock price as a multiple of some measure 3. Perpetuity growth formula C. The company's internally generated operating cash flows available to investors 4. Plug figure D. A shortcut valuation technique that computes stock value as a function of...
can someone paraphrase this please? Stock Valuation While it comes to investing, picking the right stock...
can someone paraphrase this please? Stock Valuation While it comes to investing, picking the right stock plays a crucial role. Careful research and patience are needed. One needs to check several aspects of the company before investing. There are some essential parameters that have to be analyzed and compared with similar companies before picking a stock. Stock valuation is an important tool that can help an investor make informed decisions about trading. It is a technique that determines the value...
using the P/E ratio approach to evaluation calculate the value of a share of stock under...
using the P/E ratio approach to evaluation calculate the value of a share of stock under the following Conditions: The investors required rate of return is 15% , The expected level of earnings at the end of this year ( E1 ) is $8.00 · The firm follows a policy of retaining 30% of its earnings · The return on equity ( ROE )is 20% and · Similar shares of stock sell at multiples of 7.7778 times earnings per share....
6. You expect that MotorRotor ltd. will have earnings per share of $2 for the coming...
6. You expect that MotorRotor ltd. will have earnings per share of $2 for the coming year. MotorRotor plans to retain all of its earnings for the next three years. For the subsequent two years, the firm plans on retaining 50% of its earnings. It will then retain only 25% of its earnings from that point forward. Retained earnings will be invested in projects with an expected return of 20% per year. If MotorRotor’s equity cost of capital is 12%,...
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net...
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach...
The corporate valuation model, the price-to-earnings (P/E) multiple approach, and the economic value added (EVA) approach are some examples of valuation techniques. The corporate valuation model is similar to the dividend-based valuation that you’ve done in previous problems, but it focuses on a firm’s free cash flows (FCFs) instead of its dividends. Some firms don’t pay dividends, or their dividends are difficult to forecast. For that reason, some analysts use the corporate valuation model. Tropetech Inc. has an expected net...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT