Week 7 Homework

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Maryville University *

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312

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Finance

Date

Jun 10, 2024

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xlsx

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Uploaded by MissRedDevil

The Dahlia Flower Company has earnings of $3.64 per share. The benchmark P What if the benchmark PE were 21? EPS 3.64 Benchmark PE 18 Benchmark PE 21 stock at 18 65.52 stock at 21 76.44 What stock price would you consider appropriate? (Do not round intermed round your answer to 2 decimal places, e.g., 32

PE for the company is 18. diate calculations and 2.16.)

What is the current PE ratio for each com What is the current PE ratio for each com Atlantic Energy has a new project that will increase earnings by $350,000 in perp Pacific Atlantic earings $ 790,000.00 $ 790,000.00 return 11% 11% value of company $ 7,181,818.18 $ 7,181,818.18 PE Ration 9.09 9.09 Change in Earning $ 175,000.00 $ 350,000.00 new Earnings $ 965,000.00 $ 1,140,000.00 new value $ 8,772,727.27 $ 10,363,636.36 New PE Ration 11.10 13.12 Consider Pacific Energy Company and Atlantic Energy, Incorporated, both of which rep both firms will continue to generate earnings of $790,000 in perpetuity. Assume that a require a return of 11 percent. Pacific Energy Company has a new project that will generate additional earnings of $17 ratio of the company

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mpany? mpany? petuity. Calculate the new PE ratio of the firm. ported earnings of $790,000. Without new projects, all earnings are paid as dividends and that both firms 75,000 each year in perpetuity. Calculate the new PE

The Dahlia Flower Company has earnings of $1.85 per share. The benchmark PE f EPS 1.85 benchmark PE 15 benchmark PE 18 What stock price would you consider appropriate? stock price 27.75 What if the benchmark PE were 18? stock price 33.30

for the company is 15.

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What is the current PE ratio for each compa earnings $ 962,000.00 return rate 12% value $ 8,016,666.67 PE 8.333333333333 change 112000 earings $ 1,074,000.00 return rate 12% value $ 8,950,000.00 PE 9.303534303534 change 212000 earings $ 1,174,000.00 return rate 12% value $ 9,783,333.33 PE 10.16978516979 Consider Pacific Energy Company and Atlantic Energy, Incorporated, both of whic new projects, both firms will continue to generate earnings of $962,000 in perpet dividends and that both firms require a return of 1 Pacific Energy Company has a new project that will generate additional earni Calculate the new PE ratio of the compan firm.

any? ch reported earnings of $962,000. Without tuity. Assume that all earnings are paid as 12 percent. ings of $112,000 each year in perpetuity. ny.

EPS 2.4 PE 23 growth 5% What is your estimate of the current stock price? stock price 55.20 What is the target stock price in one year? New EPS 2.52 stock price 57.96 Assuming the company pays no dividends, what is the implied return on the company’ implied return 5.00% Meadow Dew Corporation currently has an EPS of $2.40, and the benchmark PE for the expected to grow at 5 percent per year.

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’s stock over the next year? company is 23. Earnings are

sales $ 29,200,000.00 costs $ 14,300,000.00 debt $ 55,200,000.00 cash $ 39,200,000.00 shares outstanding 1,960,000.00 EV/EBTIDA multiple 8.7 What is the company’s enterprise value? EBITDA $ 14,900,000.00 sales - costs enterprise value $ 129,630,000.00 multiple * EBITDA What is the stock price per share? equity $ 113,630,000.00 EV + Cash - Debt stock price 57.9744897959184 equity / shares FFDP Corporation has yearly sales of $29.2 million and costs of $14.3 million. The c and cash of $39.2 million. There are 1,960,000 shares outstanding and

company’s balance sheet shows debt of $55.2 million d the industry EV/EBITDA multiple is 8.7.

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