Damai Bhd’s expected earnings after taxes (EAT) is RM300 million. The current market price of its common stock is RM5.00 per share. At present the company has 500 million shares outstanding and a PE ratio of 10. i. Calculate the intrinsic value of Damai Bhd’s common stock. ii. Would you buy the share at its current price? Why?

Damai Bhd’s expected earnings after taxes (EAT) is RM300 million. The current market price of its common stock is RM5.00 per share. At present the company has 500 million shares outstanding and a PE ratio of 10. i. Calculate the intrinsic value of Damai Bhd’s common stock. ii. Would you buy the share at its current price? Why?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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