Answer the following independent questions. No points are given without showing calculation steps or giving detailed explanation. When MSFT share price reaches $120 per share, MSFT has an expected P/E ratio of about 30 and an estimated required rate of market capitalization of 14%. The expected ROE is 18% and the firm has a plowback ratio of 70%. Is the stock of MSFT fairly priced? Use the intrinsic value of the stock to answer the question.
Answer the following independent questions. No points are given without showing calculation steps or giving detailed explanation.
- When MSFT share price reaches $120 per share, MSFT has an expected P/E ratio of about 30 and an estimated required rate of market capitalization of 14%. The expected
ROE is 18% and the firm has a plowback ratio of 70%. Is the stock of MSFT fairly priced? Use the intrinsic value of the stock to answer the question.
2. MatureLife’s share price is $10.5 per share with an expected EPS of $1.30 an estimated required rate of market capitalization of 10.1%. Assume that the share price is fairly priced according to a constant growth
3. MotorLife Company is expected to pay a dividend in year 1 of $2, a dividend in year 2 of $3, and a dividend in year 3 of $4. After year 3, dividends are expected to grow at the rate of 7% per year. The risk-free
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