Financial accounting Zenith Technologies has a historical Price to Earnings (P/E) ratio of 19.6.This ratio is expected to remain consistent in the future. The companycurrently has an Earnings Per Share (EPS) of $3.15. Analysts project thecompany's earnings to grow by 4.2 percent next year.Calculate the expected price of this stock one year from now.

Step 1: Define Expected Stock PriceThe Expected Stock Price is the forecasted price of a stock based…

Answered: Zenith Technologies has a historical…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An analyst produces the following series of annual dividend forecasts for company D: Expected dividend (end of) year t+1 = 10 euros; Expected dividend (end of) year t+2 = 20 euros; Expected dividend (end of) year t+3 = 10 euros. The analyst further expects that company D dividend will grow indefinitely at a rate of 2 percent after year t+3. Company D cost of equity equals 10 percent. Under these assumptions, calculate the analysts estimate of company D equity value at the end of year t.
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?
The future earnings, dividends, and common stock price of Core-Tech, Inc. are expected to grow 6% per year. Core-Tech's common stock currently sells for $21 per share; its last dividend was $2.00; and it will pay a $2.30 dividend at the end of the current year. If the firms beta is 1.9, the risk free rate is 8%, and the average return on the market is 14%, what is the firms cost of common equity (retained earnings) using the CAPM approach?
Paccar's current stock price is $95.47, and it is likely to pay a $2.79 dividend next year. Because analysts estimate Paccar will have an 9.5 percent growth rate, what is its required return? Note: Round your answer to 2 decimal places.
You want to check if GRBH stock is fairly priced in the markets by using the fundamental analysis. For this purpose, you have gathered the following information: GRBH pays dividends once a year and the next dividend payment is expected to be made in one year. You project the EPS of the first and second year to be $5 and $7 respectively. The company dividend payout ratio is stable at 0.2. At the end of the second year, you assume that the company would become the average company in the industry. The industry average PE ratio is 8. You believe that the appropriate required rate of return on GRBH stock is 10% (CCR per annum). And the current market price of GRBH stock is $45. ind the present value of GRBH stock based on the information above. Is the stock over- or under-priced?
Nikul
Rise Above This Corp. currently has an EPS of $3.47 and the benchmark PE for the company is 19. Earnings are expected to grow at 6 percent per year. What is your estimate of the current stock price? What is the target stock price in one year? Assuming the company pays no dividends, what is the implied return on the company’s stock over the next year?
Simon Fixtures Corp. is expected to pay $2.00 per share in dividends at the end of the year. The growth rate in dividends is expected to be constant at 8% per year. If the stock is selling for $50 per share, what is the required rate of return?
Suppose Facebook Inc. currently pays $1 dividend. Analysts project that the dividend for the next three years will be $1, $2, and 5$. After that the annual dividend is predicted to grow at 5% per year. Investors require a 10% rate of return. What is the value of one share of Facebook stock under these assumptions?
A firm belongs to an industry whose median P/E ratio is 20.65. This P/E ratio is expected to be constant in the next several years. The firm's earnings per share this year (EPS_0) is $7.14. The earnings per share is expected to grow at a rate of 4.63 percent per year in the next five years. Calculate the expected price of this firm's stock three years from today. $168.88 $154.27 $154.27 $147.44 $211.10
Currently, a firm has an EPS of $2.13 and a benchmark PE of 18.64. Earnings are expected to grow by 3.8 percent annually. What is the estimated current stock price?
Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8.00% thereafter. Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 11.00%, what is your estimate of the stock's current value? Use the dividend values provided in the table below for your calculations. Do not round your intermediate calculations. Year Growth ΝΑ rate Dividends $0.000 0 1 2 3 4 5 6 NA ΝΑ ΝΑ 90.00% 45.00% 8.00% $0.000 $0.000 $0.250 $0.475 $0.689 $0.744

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