Quantum Networks is projecting strong results due to innovations in artificial intelligence technologies. The company forecasts its earnings per share (EPS) to increase by 25%, reaching $4.80 next quarter. Estimate the market price of Quantum Networks' common stock, assuming the technology sector's price/earnings (P/E) ratio is 22.
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- XYZ Corporation expects its earnings per share (EPS) to grow by 20% this year, reaching $4.80. If the industry.s price/earnings (P/E) ratio is 15, estimate the market price of XYZ Corporation. s common stock.A financial analyst estimates that the current risk-free rate for NN company is 6.25 percent, the market risk premium is 5 percent, and NN's beta is 1.75. The current earnings per share (EPS0) is RM2.50. The company has a 40 percent payout ratio. The analyst estimates that the company's dividend will grow at a rate of 25 percent this year, 20 percent next year, and 15 percent the following year. After three years the dividend is expected to grow at a constant rate of 7 percent a year. The company is expected to maintain its current payout ratio. The analyst believes that the stock is fairly priced. a) What is the required rate of return for the stock? b) What are the dividends for 4 years? c) What is the stock price at the end of year 3?General accounting
- Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 22% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g =o. The company's last dividend, Do, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock? Do not round intermediate calculations. O a $28.97 O b. $27.37 O c. $23.39 O d. $32.69 O e. $26.57Trend-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?Energy Resources generated an EPS of $3.13 over the last 12 months. The company's earnings are expected to grow by 29.6% next year, and because there will be no significant change in the number of shares outstanding, EPS should grow at about the same rate. You feel the stock should trade at a P/E of around 35 times earnings. Use the P/E approach to set a value on this stock. *** Using the P/E approach, the value on this stock is $ (Round to the nearest cent.)
- Banco Tech is an early stage financial technology firm. Earnings this year where $20 per share and are expected to grow at 20% per year for the next three years. Banco does not plan to pay a dividend until three years time, when the payout ratio will be 43%. Dividends are expected to grow at 6% thereafter. The required rate of return is 9%. Calculated intrinsic value.Adobe Systems has come out with a new and improved product. As a result, the firm projects an ROE of 22.5%, and it will maintain a plowback ratio of .50. Its projected earnings are $3.75 per share. Investors expect an 18% rate of return on the stock. At what price and P/E ratio would you expect the firm to sell and what is the preset value of growth opportunities?Harmony Corporation will pay a dividend of RM1.50 a share next year. After this, earnings and dividends are expected to grow at a 9% annual rate indefinitely. Investors currently require a rate of return of 13%. The company is considering the following two business strategies and wishes to determine the effect of these strategies on the market price per share of its stock. Strategy 1: Continuing the present strategy will result in the expected growth rate and required rate of return stated above. Strategy 2: Expanding Harmony Corporation sales will increase the expected dividend growth rate to 11% but will increase the risk of the company. As a result, the rate of return required by investors will increase to 16%. From the standpoint of market price per share, which strategy is better? Show relevant workings to support your answer.
- Enrich, Inc., has expected earnings of $4 per share for next year. The firm's ROE is 16%, and its earnings retention ratio is 60%. If the firm's market capitalization rate is 12%, what is the present value of its growth opportunities (PVGO)? $28.88 $38.25 O $33.34 $66.67Roma Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 22% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company’s last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 22% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50 %, and the risk - free rate is 3.00 % . What is the current price of the common stock? Do not round intermediate calculations. a. $27.82 b. $27.21 c. $29.13 d. $25.83 e. $26.57
