Answered: Discuss the two factors that determine…

Discuss the two factors that determine the franchise value of a firm. Assuming a firm has a base cost of equity of 11% and does not have a franchise value, what will be its P/E?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

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Discuss the two factors that determine the franchise value of a firm. Please solve these general accounting question

Discuss the two factors that determine the
franchise value of a firm. Assuming a firm has
a base cost of equity of 11% and does not
have a franchise value, what will be its P/E?

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This is how to get a fair P/E ratio of a company using NOPAT growth, ROIIC (ROIC), and Cost of capital NOPAT growth: 10%ROIIC: 20% → Fair P/E: 32.3Cost of capital: 6.7% read the picture and it shows the instruscture, however, it does not say the specific stpes of how they get the fair P/E mulitple of 32.3. it summarlized without showing steps. So please show the step of how to get this result which is 32.3 Price to earnings ratio. U may use DCF for this! thank you!
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