The following financial information belong to the Avatar Inc. that is currently listed on the stock exchange under the technology sector: Total assets Total equity Net profit after taxes Earnings per share (EPS) Dividend payout ratio RM150,000,000 RM70,000,000 RM20,000,000 RM6.00 per share 45 percent By using the constant-growth Dividend Valuation Model (DVM) and a required rate of return of 20 percent, find the maximum price you should be willing to pay for this stock. Explain 'cyclical stocks' in relation to beta.
The following financial information belong to the Avatar Inc. that is currently listed on the stock exchange under the technology sector: Total assets Total equity Net profit after taxes Earnings per share (EPS) Dividend payout ratio RM150,000,000 RM70,000,000 RM20,000,000 RM6.00 per share 45 percent By using the constant-growth Dividend Valuation Model (DVM) and a required rate of return of 20 percent, find the maximum price you should be willing to pay for this stock. Explain 'cyclical stocks' in relation to beta.
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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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:The following financial information belong to the Avatar Inc. that is
currently listed on the stock exchange under the technology sector:
Total assets
Total equity
Net profit after taxes
Earnings per share (EPS)
Dividend payout ratio
RM150,000,000
RM70,000,000
RM20,000,000
RM6.00 per share
45 percent
By using the constant-growth Dividend Valuation Model (DVM) and a
required rate of return of 20 percent, find the maximum price you should
be willing to pay for this stock.
Explain 'cyclical stocks' in relation to beta.
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