Lauren Industries has an 18 percent annual growth rate compared to the market rate of 8 percent. If the market multiple is 18, determine P/E ratios for Lauren Industries, assuming its beta is 1.0 and you feel it can maintain its superior growth rate for a) the next 10 years. b) the next 5 years.
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- Trend-Line Inc. has been growing at a rate of 6% per year and is expected to continue to do so indefinitely. The next dividend is expected to be $8 per share. a. If the market expects a 10% rate of return on Trend-Line, at what price must it be selling i.e. Current selling price?The return of ABC company at present is 20%. This is assumed to continue for thenext 3 years and after that it is assumed to have a growth rate of 10% indefinitely.The dividend paid in the current year for the last year is $ 3.2. The required rate ofreturn is 15% and it is saleable in the market is 57$. What will be the estimated priceaccording to variable growth model? And is it advisable to sell. The PV factors @15%for Years 1 to 3 are 0.870, 0.756 and 0.658 respectively.Lauren Entertainment, Inc., has an 16 percent annual growth rate compared to the market rate of 6 percent. If the market multiple is 18, determine P/E ratios for Lauren Entertainment, Inc., assuming its dividend yield is zero, its beta is 1.00 and you feel it can maintain its superior growth rate for: 1.the next 12 years. Do not round intermediate calculations. Round your answer to two decimal places. 2. the next 6 years. Do not round intermediate calculations. Round your answer to two decimal places.
- ARN has come out with a new and improved product. As a result, the firm projects an ROE of 25%, and it will maintain a plowback ratio of .20. Its earnings this year will be $3 per share. Investors expect a 9% rate of return on the stock.What is the present value of growth opportunities for ARN? Round your answer to two decimal places.Blossom Departmental Stores management has forecasted a growth rate of 40 percent for the next two years,followed by growthrates of 25 percent and 20 percent for the following two years. It then expects growth to stabilize at a constant rate of 7.5 percentforever.The firm paid a dividend of $3.00 recently. If the required rate of return is 15 percent, what is the current value of Blossom'sstock? (Round all intermediate calculations and final answer to 2 decimal places,e.g.15.25.) Current value = ?Show Detailed Steps When Solving The Following Question: Gordon Growth Company is expected to pay a dividend of $4 next period, and dividends are expected to grow at 6% per year. The required return is 16%. What is the current price? What is the price expected to be in year 4?
- Whizcom Inc. is expected to pay a dividend of $1 next period. Dividends are expected to grow at 2% per year and the investors require a return of 12%. a) What would be the likely stock price in year 5? b) What would be per annum rate of return implied by a change in prices from time 0 to time 5?Market analysts expect the earnings per share of KLM Ltd to be $2.00 next year. The earnings per share are expected to grow at 7% p.a. forever and the firm typically retains 40% of its earnings. Analysts believe that this policy will continue in the foreseeable future. If investors require a return of 12%, the company's expected (or forward) price-to-earnings ratio will be closest to: 24.00. O 8.00. O 5.00. O 12.00.Today (n=0), a company invests $1,000 and expects that investment to grow 10% each period for the next six periods (n=6). What is the investment's expected future value?
- Soju Ltd is currently trading at $39, and recently paid an annual dividend of $4.5. If it is expected to pay annual dividends and maintain a retention ratio of 30% and a ROE of 8% (annually), what is the required rate of return per year based on the market price？Trend-Line Incorporated has been growing at a rate of 7% per year and is expected to continue to do so indefinitely. The next dividend is expected to be $6 per share. If the market expects a 12% rate of return on Trend-Line, at what price must it be selling? If Trend-Line’s earnings per share will be $9 next year, what part of its value is due to assets in place? If Trend-Line’s earnings per share will be $9 next year, what part of its value is due to growth opportunities?Percentages need to be entered in decimal format, for instance 3% would be entered as .03. 2.Ultimate Electric, Inc. has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, Ultimate is expected to experience a 15% annual (nonconstant) growth rate for the next five years (supernormal period). When the five-year period ends, other firms will have developed comparable technology, and Ultimate's growth rate will slow to 5% per year (constant) indefinitely. Stockholders require a return of 12% on Ultimate's stock. The firms's most recent annual dividend (D0), which was paid yesterday, was $1.75 per share. What is the current price (P0) of the stock today? What is the market value (price) at the end of Year 3.Consider the scenario in Question 2 and suppose your boss believes that Ultimate's annual nonconstant growth rate will only be 12% during the next five years and that the firm's normal growth rate…
