Due to the growing demand for computer software, the Perry Company has had a very successful year and expects its earnings per share to grow by 25% to reach $5.50 for this year. Estimate the price of the company's common stock assuming the industry's price/earnings ratio is 12.
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- The current stock price of Bay James Tourism Company is $25. Current earnings per share are $15 and are expected to grow by 20% next year. Bay James Tourism's trailing and forward price-earnings ratios are:Please correct sir and explanation too and not on page.Diana Corporation anticipates a 10 percent growth in net income and dividends. Next year, the company expects earnings per share of P5 and dividends per share of P3. Diana will be having its first public issuance of common stock. The stock will be issued at P40 per share. REQUIREMENTS: 1. What is the P/E ratio? 2. What is the required rate of return on the stock?
- A firm belongs to an industry whose median P/E ratio is 20.65. This P/E ratio is expected to be constant in the next several years. The firm's earnings per share this year (EPS_0) is $7.14. The earnings per share is expected to grow at a rate of 4.63 percent per year in the next five years. Calculate the expected price of this firm's stock three years from today. $168.88 $154.27 $154.27 $147.44 $211.10Financial AccountingIoT Inc., is in the business of measuring Southwest Water’s water demand in Exeter. At the end of the year IoT is expected to pay a $4 dividend per share. It reinvests 40% of its earnings and is growing at 4% a year. a. Assume that IoT continues on this growth trend. What is the expected longrun rate of return from purchasing the stock at $100? b. What part of the price of $100 is attributable to the present value of growth opportunities? Briefly explain your calculations.
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