provided are from year-end 2021. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.60 percent, and the market risk premium is 7 percent. Dividends per share Return on equity Book value per share 2021 value per share Average price multiple Forecasted growth rate $ 2.24 9.50% $ 18.55 Earnings $ 5.00 13.10 13.58% Cash Flow $ 6.30 9.52 11.31% Sales $ 25.65 2.46 7.05% a. What are the sustainable growth rate and required return for Beagle Beauties? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
provided are from year-end 2021. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.60 percent, and the market risk premium is 7 percent. Dividends per share Return on equity Book value per share 2021 value per share Average price multiple Forecasted growth rate $ 2.24 9.50% $ 18.55 Earnings $ 5.00 13.10 13.58% Cash Flow $ 6.30 9.52 11.31% Sales $ 25.65 2.46 7.05% a. What are the sustainable growth rate and required return for Beagle Beauties? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Kindly help and not handwritten. Pls correct
Transcribed Image Text: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 2021. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.60 percent, and the market risk
premium is 7 percent.
Dividends per share
Return on equity
Book value per share
2021 value per share
Average price multiple
Forecasted growth rate
Sustainable growth rate
Required return
$ 2.24
9.50%
$ 18.55
Share price
Earnings
$ 5.00
13.10
13.58%
Cash Flow
$ 6.30
%
%
9.52
11.31%
a. What are the sustainable growth rate and required return for Beagle Beauties?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Sales
$ 25.65
2.46
7.05%
b. Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth model.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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