The market capitalization rate on the stock of Aberdeen Wholesale Company is 14%. Its expected ROE is 20% and its expected EPS is $5.00. If the firm's plow-back ratio is 30%, its P/E ratio is 8.75 11.67 19.23 24.15 None of the above

The market capitalization rate on the stock of Aberdeen Wholesale Company is 14%. Its expected ROE is 20% and its expected EPS is $5.00. If the firm's plow-back ratio is 30%, its P/E ratio is 8.75 11.67 19.23 24.15 None of the above

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 4P: Reno Revolvere has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of...

See similar textbooks

Related questions

Q: Suppose that a company yields mean returns of 20% (equity), and 9% mean returns on every peso the…

A: The mean return on equity refers to the weighted average return on equity. The return on bonds is…

Q: Sun Pharma Company earns Rs 10 per share, is capitalized at a rate of 12 per cent and has a rate of…

A: The question is related to Dividend Policy. The Price of Share as oer Gorden's Model is calculated…

Q: Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium…

Q: Suppose that the average P/E multiple in the chemicals industry is 26. Smart Chemical is expected to…

A: Intrinsic value is the actual true value of the stock of a particular company irrespective of the…

Q: What is the justified leading P/E ratio of the Tencent Holdings Ltd. given the following…

A: The objective of this question is to calculate the justified leading Price/Earnings (P/E) ratio for…

Q: Stormy Weather has no attractive investment opportunities. Its return on equity equals the discount…

A: We need to understand the following equation to solve this problem Growth rate =Return on…

Q: 1. If the return on the market portfolio is 10% and the risk-free rate is 5%, what is the effect on…

A: Risk free rate = 5% Market return = 10% Old beta = 1.20 New beta = 1.50 Change in beta= 1.50-1.20 =…

Q: The market capitalization rate on the stock of Aberdeen Wholesale Company is 11%. Its expected ROE…

A: Price-earnings ratio refers to the ratio that is computed by taking share price as the numerator and…

Q: You have assigned the following values to these three firms: Upcoming Dividend US Bancorp Praxair…

A: Beta1.592.20.98Market Portfolio15.50%15.50%15.50%Risk free rate 5.70%5.70%5.70%We have to calculate…

Q: The market capitalization rate for Admiral Motors Company is 8%. Its expected ROE is 10% and its…

A: Market capitalization rate = 8%Expected ROE = 10%Expected EPS = $5Plowback ratio = 60%

Q: ration A traded at a P/B (price-to-book) ratio of 0.5. Its most recent reported ROCE is 10% and its…

A: The ROCE is return on total capital debt ,loan and equity employed by the company and return on…

Q: A firm is expected to earn $8 per share. The pay-out ratio is 60% and it will remain sam If the ROE…

A: Growth rate = (1 - payout ratio) x ROE Growth rate = (1 - 0.60) x 0.25 Growth rate = 0.40 x 0.25…

Q: Determine the cost of common stock (equity). The T-Bill rate is 5.2%. The Market Return is 12.7%.…

A: Market Return = 12.7%Beta = 1.27T-Bill Rate = Risk Free Rate = 5.2% ExplanationWe calculate the Cost…

Q: The market capitalization rate on the stock of Aberdeen Wholesale Company is 7%. Its expected ROE is…

A: 1.P/E ratio means price earnings ratio.P/E ratio is calculated as follows:-P/E ratio = 2.According…

Q: Analysts are projecting that Halyk Bank will have earnings per share of 3.55. If the average…

A: The most recent price with which a security was traded on an exchange is the current price. Buyers…

Q: Largan Co has a preterted stock outstanding with a par value of $100 and its dividend is $1 per…

A: NOMINAL RATE OF RETURN Nominal Rate of Return is the Ratio between Annual Dividend & Current…

Q: The market capitalization rate on the stock of Aberdeen Wholesale Company is 7%. Its expected ROE is…

A: The price-to-earnings ratio (P/E ratio) is the ratio that is used for valuing a company. It measures…

Q: A biotechnology company's stock is currently selling for $48.35 per share. The earnings per share…

A: The Current Yield is the investment annual income which is divided by the current market price. It…

Q: Here are data on two companies. The T-bill rate is 4% and the market risk premium is 6%. Company…

A: Capital asset pricing model refers to the model that helps to determine expected or required rate of…

Q: You forecast to have a ROE of 14%, and dividend payout ratio of 12%. Currently the company has a…

A: PEG ratio is the ratio of price by earning divided by growth of earning . formula: PEG=P/E…

Q: Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%. Company…

A: A financial framework employed to estimate an asset's anticipated rate of return is termed the…

Q: The stock of Pills Berry Company is currently selling at $60 per share. The firm pays a dividend of…

A: Stocks in the capital market offer return in two ways. The first way is offering dividends on a…

Q: Suppose the average industry PE ratio for auto parts retailers is 20. Auto Zone's earnings per share…

A: Given information : Industry P/E ratio = 20 Expected earnings = $1.90 Current market price = $35

Q: A firm in steady-state earned $5 per share this year and paid a $4 dividend. The firm is currently…

A: Earning per share (EPS) =5Dividend per share (DPS) = 4Stock Price = 55ROE = 0.08Discount Rate = 0.1

Q: You forecast the company A’s future earning is going to be $5.34 per share. The current market price…

A: PE ratio ratio measures current price of the company to its earning per share. formula: PE = CURRENT…

Q: The market capitalization rate on the stock of Aberdeen Wholesale Company is 14%. Its expected ROE…

A: A ratio that provides information regarding the share price of a company by relating it to the…

Q: Bunkhouse Electronics is a recently incorporated firm that makes electronic entertainment systems.…

A: Part a: Cost of Equity using the Capital asset pricing model (CAPM): Given information: Beta = 1.33…

Q: Castle-in-Sand generates a rate of return of 20% on its investments and maintains a plowback ratio…

A: Growth rate= Return on equity*Plowback ratio = 0.20*0.30 = 0.060 or 6.00% Dividend= EPS*(1-Plowback…

Q: The stock of North American Danduff Company is selling at $80 per share. The firm pays a divdend of…

A: Given Information: Stock price - $80 per share Dividend - $2.50 per share

Question

8. The market capitalization rate on the stock of Aberdeen Wholesale Company is 14%. Its expected ROE is 20% and its expected EPS is $5.00. If the firm's plow-back ratio is 30%, its P/E ratio is

8.75
11.67
19.23
24.15
None of the above

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Explanation of DDM

VIEW

Step 2: Calculation of the PE ratio

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The market capitalization rate on the stock of Aberdeen Wholesale Company is 7%. Its expected ROE is 8%, and its expected EPS is $3. If the firm's plowback ratio is 75%, its P/E ratio will be Multiple Choice O O O O 29.00 100.00 25.00 20.00
The market capitalization rate on the stock of Aberdeen Wholesale Company is 7%. Its expected ROE is 8%, and its expected EPS is $3. If the firm's plowback ratio is 75%, its P/E ratio will be Multiple Choice 25.00 29.00 సె 100.00 20.00
The market capitalization rate on the stock of Aberdeen Wholesale Company is 11%. Its expected ROE is 12%, and its expected EPS is $8. If the firm's plowback ratio is 65%, its P/E ratio will be? if you can add the steps and formulas through excel
You forecast to have a ROE of 14%, and dividend payout ratio of 12%. Currently the company has a price of $30 and $7 earnings per share. What is the PEG ratio based on market price?
You forecast the company A’s future earning is going to be $5.34 per share. The current market price is $55. What the market forward PE ratio? The estimated growth rate is 10%, what is the PEG ratio based on your estimate of growth rate? The industry average has a P/E ratio of 14 and growth rate of 12%, what does it mean for A’s stock price?
The Farmer Co. has a payout ratio of 65% and a return on equity (ROE) of 16% (assume that this is expected ROE for the upcoming year). What will be the appropriate price-to-book value (PBV) based on return differential if the expected growth rate in dividends is 5.6% and the required rate of return is 13% ?
The market capitalization rate on the stock of Aberdeen Wholesale Company is 10%. Its expected ROE is 12%, and its expected EPS is $5. If the firm's payout ratio is 40%, what is the value of the stock assuming a constant growth of dividends? Round your answer to two decimal places
The stock of North American Danduff Company is selling at $80 per share. The firm pays a divdend of $2.50 per share. a) What is the dividend yield? b) If the firm has a payout rate of 50% , what is the firm's P/E ratio?
The preference share of Acme International is selling currently at $107.4. If your required rate of return is 8.7 per cent, what is the dividend paid by this share?
Here are data on two companies. The T-bill rate is 5.6% and the market risk premium is 7.1%. $1 Discount Store Everything $5 13% 18% Company Forecast return. Standard deviation of returns Beta Company $1 Discount Store Everything $5 Expected Return 14% 16% Required: What would be the expected rate of return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.) % % 1.6 1.0
You have assigned the following values to these three firms: Upcoming Dividend US Bancorp Praxair Eastman Kodak Price $ 29.80 59.15 36.50 $ 3.20 1.51 1.00 US Bancorp required return Praxair required return Eastman Kodak required return CAPM Growth 8.80% Assume that the market portfolio will earn 15.50 percent and the risk-free rate is 5.70 percent. Compute the required return for each company using both CAPM and the constant-growth model. Note: Do not round intermediate calculations and round your final answers to 2 decimal places. % % % 13.00 11.50 Beta 1.59 2.20 0.98 Constant-Growth Model % % %
The Cost of Equity and Flotation Costs Messman Manufacturing will issue common stock to the public for $30. The expected dividend and the growth in dividends are $3.00 per share and 5%, respectively. If the flotation cost is 10% of the issue’s gross proceeds, what is the cost of external equity, re?