National Co.’s ordinary share is currently trading at a price of P30 per share. The said share is properly valued as it is neither overvalued nor undervalued. The company is showing a 2% annual growth rate that will continue indefinitely. The projected EPS is P6.00 and the dividend policy of the firm that pays out half of the earnings is strictly followed. Aggressive beta is determined at 2.00. Market risk premium is 4% and the 90-day treasury bill rate is also 4%. What will be the new stock price if the overall market return increased to 10%, all other things remained constant?
National Co.’s ordinary share is currently trading at a price of P30 per share. The said share is properly valued as it is neither overvalued nor undervalued. The company is showing a 2% annual growth rate that will continue indefinitely. The projected EPS is P6.00 and the dividend policy of the firm that pays out half of the earnings is strictly followed. Aggressive beta is determined at 2.00. Market risk premium is 4% and the 90-day treasury bill rate is also 4%. What will be the new stock price if the overall market return increased to 10%, all other things remained constant?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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National Co.’s ordinary share is currently trading at a price of P30 per share. The said share is properly valued as it is neither overvalued nor undervalued. The company is showing a 2% annual growth rate that will continue indefinitely. The projected EPS is P6.00 and the dividend policy of the firm that pays out half of the earnings is strictly followed. Aggressive beta is determined at 2.00. Market risk premium is 4% and the 90-day treasury bill rate is also 4%. What will be the new stock price if the overall market return increased to 10%, all other things remained constant?
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