Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog lookglamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the valuesprovided are from year-end 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.05 percent, and the market riskpremium is 6.1 percent.Dividends per shareReturn on equityBook value per share2015 value per shareAverage price multipleForecasted growth rateUsing P/E ratioUsing P/CF ratioUsing P/S ratio$ 2.288.50%$17.15Share priceEarnings Cash Flow$ 5.20 $6.7013.309.4813.5211.518Using the P/E, P/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties. (Do not round intermediate calculations.Round your answers to 2 decimal places.)Sales$25.752.447.461

Investors, analysts, and financial professionals frequently utilize the P/E ratio as a valuation…

Answered: Dividends per share Return on equity…

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Dividends per share Return on equity Book value per share $ 2.28 8.50% $17.15

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.05 percent, and the market risk
premium is 6.1 percent.
Dividends per share
Return on equity
Book value per share
2015 value per share
Average price multiple
Forecasted growth rate
Using P/E ratio
Using P/CF ratio
Using P/S ratio
$ 2.28
8.50%
$17.15
Share price
Earnings Cash Flow
$ 5.20 $6.70
13.30
9.48
13.52
11.518
Using the P/E, P/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Sales
$25.75
2.44
7.461

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