the investor's required rate of return is 15 percent, the expected level of earnings at the end of this year (E,) is $7, the retention ratio is 40 percent, the return on equity (ROE) is 19 percent (that is, it can earn 19 percent on reinvested earnings), and similar shares of stock sell at multiples of 8.109 times earnings per share. uestions: Determine the expected growth rate for dividends. Determine the price earnings ratio (PIE,). What is the stock price using the P/E ratio valuation method? What is the stock price using the dividend discount model? ...... .6 % (Round to two decimal places.) What is the price earnings ratio (PIE,)? 109 (Round to three decimal places.) What is the stock price using the P/E ratio valuation method? 56.76 (Round to the nearest cent.)
the investor's required rate of return is 15 percent, the expected level of earnings at the end of this year (E,) is $7, the retention ratio is 40 percent, the return on equity (ROE) is 19 percent (that is, it can earn 19 percent on reinvested earnings), and similar shares of stock sell at multiples of 8.109 times earnings per share. uestions: Determine the expected growth rate for dividends. Determine the price earnings ratio (PIE,). What is the stock price using the P/E ratio valuation method? What is the stock price using the dividend discount model? ...... .6 % (Round to two decimal places.) What is the price earnings ratio (PIE,)? 109 (Round to three decimal places.) What is the stock price using the P/E ratio valuation method? 56.76 (Round to the nearest cent.)
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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