Question: Question 1.c (5 marks) Ingrid is considering using the existing cash at bank to fund the purchase of some shares and has identified two companies

Question 1.c (5 marks)

Ingrid is considering using the existing cash at bank to fund the purchase of some shares and has identified two companies of interest:

ABC Limited

- share price AUD4.50

- projected earnings per share AUD0.45

- projected dividend per share AUD0.20

- average price earnings ratio for similar companies 8.5 to 1

XYZ Limited

- share price AUD12.50

- projected earnings per share AUD1.50

- projected dividend per share AUD0.60

- average price earnings ratio for similar companies 10.5 to 1

Appraise these two companies and make a recommendation (make sure you state your reasons). (5 marks)

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