The current market price of certain company is £45 per share. The estimated cost of equity of this company is 12%. You have the additional set of information about this company: Expected dividend per share (DPS) for the next year Expected equity book value per share (BPS) for the current year Expected earnings per share (EPS) for the current year £2.1 £20.0 £7.5 The expected payout ratio and return on equity (ROE) of this company, rounded to zero decimals, is:
The current market price of certain company is £45 per share. The estimated cost of equity of this company is 12%. You have the additional set of information about this company: Expected dividend per share (DPS) for the next year Expected equity book value per share (BPS) for the current year Expected earnings per share (EPS) for the current year £2.1 £20.0 £7.5 The expected payout ratio and return on equity (ROE) of this company, rounded to zero decimals, is:
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
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Transcribed Image Text:The current market price of certain company is £45 per share. The estimated cost of equity of this company is 12%. You have the additional set
of information about this company:
Expected dividend per share (DPS) for the next year
Expected equity book value per share (BPS) for the current
year
Expected earnings per share (EPS) for the current year
O a. 21% and 37%, respectively
O b.
The expected payout ratio and return on equity (ROE) of this company, rounded to zero decimals, is:
O C.
O d.
£2.1
26% and 38%, respectively
£20.0
None of the previous answers is correct
£7.5
35% payout ratio and it is not possible to compute the ROE
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