Question: Calculate the trailing and forward P/E ratios using the following assumptions: RF = 5 percent; Î² = 0.65; market risk premium = 5 percent; dividends

Calculate the trailing and forward P/E ratios using the following assumptions: RF = 5 percent; Î² = 0.65; market risk premium = 5 percent; dividends and earnings grow at 6 percent indefinitely; and the firm maintains its current dividend payout ratio.

Sales Cost of goods sold Depreciation Interest Income tax Dividends $1,550,000 350,000 400,000 150,000 260,000 300,000 500,000 10x Common shares outstanding P/EBITDA

Step by Step Solution

★★★★★

3.32 Rating (196 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

k R F market risk premium 5 ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

413-B-A-I (5066).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Earnings per Share and Dividend Payout Ratio Compute (1) Earnings per share and (2) Dividend payout ratio for Companies S and T. Indicate which of the two companies is more likely to be an older...

The dividend payout ratio equals dividends paid divided by earnings. How would you expect this ratio to behave during a recession? What about during an economic boom?

The following is a regression of dividend payout ratios on the risk and ln(market capitalization: in millions) of chemical firms: Dividend Payout Ratio = 0.14 + 0.05 [ln(Market Capitalization in...

ues 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...

Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...

ues 17: B. J. Industries has a current ratio of 2.5, with $2.5 million in current assets. Due to sales growth, it wants to expand accounts receivable and inventories by taking on additional...

Consider a company with the following financial information: Sales $1,550,000 CGS 350,000 Depreciation 400,000 Interest 150,000 Income tax 260,000 Dividends 300,000 Common shares outstanding 500,000...

a. You are going to value Lauryns Doll Co. using the FCF model. After consulting various sources, you find that Lauryn's has a reported equity beta of 1.7, a debt-to-equity ratio of .7, and a tax...

Kindly assist with the attached assignment, would be great if you can show your working as well Hult International Business School - Dubai - EMBA Post Course Individual Assignment Course: Financial...

Question 4 Which one of the following will Which one of the following will increase the price-earnings ratio, all else constant?all else constant? (I.) a decrease in the number of shares outstanding...

Consider the 2019 Annual Report of Blackmores Group. Briefly explain how Blackmores governance is organized. Do you notice any strategies in place to align manager and shareholder interests at...

A state has just changed one of its toll roads from human collection of tolls to machine collection. The idea behind the change was to allow traffic to flow more smoothly through the toll plaza. With...

Given the following code, what class method within ClassB is automatically called when the print statement is called? b = ClassB ( ) print ( b )

An auto rental firm is using 15 identical motors that are adjusted to run at fixed speeds to test three different brands of gasoline. Each brand of gasoline is assigned to exactly five of the motors....

What useful information do we obtain from the dividend yield, P/E ratio, M/B ratio, and EBITDA multiple?

Why might bankers focus more on the quick ratio than on the current ratio?

What useful information do we obtain from a firms working capital, current, and quick ratios?

Problem 1 0 - 9 Calculating Auto Liability Claim Coverage [ LO 1 0 - 5 ] Becky has 2 5 / 5 0 / 5 automobile insurance coverage. If two other people are awarded $ 2 7 , 0 0 0 each for injuries in an...

help in question The random variables X and Y have the following joint probability density function r: 1 1

A firm is in a deal to be bought for $ 1 0 0 in cash; current price is at $ 9 8 . ABC announces that earnings for the year will be 5 % higher than previously expected. what would be the stock price?