Question: please show excel formula! only the problems in red. A- You are attempting to value the stock of Pendant Publishing using an appropriate price to
A- You are attempting to value the stock of Pendant Publishing using an appropriate price to earnines ratio. You have identified three close competitors that have price to earnings ratios of 32.4,34.5, and 28.9. If you estimate that the company you are valuing will have earnings per share of $2.63 next year, what price should you be willing to pay for Pendant's stock assuming the average earnings per share of the competitors is a good proxy for what Pendant's PE ratio should be. ( 9 points total) 8. -You are a little skeptical of the valuation you have calculated based on the competitors" PE ratios, so you decide to calculate a PE ratio based on Pendant's ROE and retention ratio. First, you need to figure out what an appropriate rate of return should be for the holding Pendant' 's stock. You have collected monthly data for the excess return of the market and Pendant's stock over the last 5 years (given below). Assuming the risk free rate is 5.2% and you expect the return on the market to be 9.3% over your investment horizon, what is Pendant's beta and expected return? ( 10.5 points total) C. Pendant has a retention ratio of 44%, and an ROE of 0.4%. Using the required return calculated in part B, what would an appropriate PE ratio and price be for Pendant's stock? (10.5 points total)
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