Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2021. Also assume that the firm's equity beta is 1.20, the risk-free rate is 2.40 percent, and the market risk premium is 9.0 percent. Dividends per share Return on equity Book value per share 2021 value per share Average price multiple. Forecasted growth rate $ 2.16 11.50% $17.95 Share price Earnings Cash Flow $5.00 $ 6.50 13.10 9.48 13.54% 11.35% Sales $25.65 2.42 7.04% The sustainable growth rate is 6.532 percent, and the required return is 13.20 percent. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual income model. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2021. Also assume that the firm's equity beta is 1.20, the risk-free rate is 2.40 percent, and the market risk premium is 9.0 percent. Dividends per share Return on equity Book value per share 2021 value per share Average price multiple. Forecasted growth rate $ 2.16 11.50% $17.95 Share price Earnings Cash Flow $5.00 $ 6.50 13.10 9.48 13.54% 11.35% Sales $25.65 2.42 7.04% The sustainable growth rate is 6.532 percent, and the required return is 13.20 percent. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual income model. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look
glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values
provided are from year-end 2021. Also assume that the firm's equity beta is 1.20, the risk-free rate is 2.40 percent, and the market risk
premium is 9.0 percent.
Dividends per share
Return on equity
Book value per share
2021 value per share
Average price multiple
Forecasted growth rate
$ 2.16
Share price
11.50%
$ 17.95
Earnings
$5.00
13.10
13.54%
Cash Flow
$ 6.50
9.48
11.35%
Sales
$25.65
2.42
7.04%
The sustainable growth rate is 6.532 percent, and the required return is 13.20 percent. Use the clean surplus relationship to calculate
the share price for Beagle Beauties with the residual income model.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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