Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 18, Problem 9PS
A
Summary Introduction
To calculate: The selling price of stock when the current year earnings are to be $2 per share and market capitalization rate is 12%.
Introduction: The selling price of the share is the value of the share at which it is sold in the market. The stock price can be compared to the intrinsic value by using price earnings ratio. So determination of selling price of the stock is more important.
B
Summary Introduction
To calculate: The expected selling price of MF shares in three years is to be determined.
Introduction: The selling price of the share is the value of the share at which it is sold in the market. The stock price can be compared to the intrinsic value by using price earnings ratio. So determination of selling price of the stock is more important.
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a. MF Corp. has an ROE of 16% and a plowback ratio of 50%. If the coming year’s earnings are expected to be $2 per share, at what price will the stock sell? The market capitalization rate is 12%.b. What price do you expect MF shares to sell for in three years?
Genius Lab is expected pay $1 dividend per share at the end of the year. The dividend will grow 50% the following year (i.e., $1.5 is the second year dividend), then at 4% thereafter. If the required return for Genius Lab s is 7.5%, what is the intrinsic value of the stock? Round your answer to two decimal places.
MF Corp. has an ROE of 17% and a plowback ratio of 60%. The market capitalization rate is 14%.
a. If the coming year's earnings are expected to be $2.80 per share, at what price will the stock sell (round to 2 decimal places)?
Price
$?
b. What price do you expect MF shares to sell for in four years (round to 2 decimal places)?
Price
$?
Chapter 18 Solutions
Investments
Ch. 18 - Prob. 1PSCh. 18 - Prob. 2PSCh. 18 - Prob. 3PSCh. 18 - Prob. 4PSCh. 18 - Prob. 5PSCh. 18 - Prob. 6PSCh. 18 - Prob. 7PSCh. 18 - Prob. 8PSCh. 18 - Prob. 9PSCh. 18 - Prob. 10PS
Ch. 18 - Prob. 11PSCh. 18 - Prob. 12PSCh. 18 - Prob. 13PSCh. 18 - Prob. 14PSCh. 18 - Prob. 15PSCh. 18 - Prob. 16PSCh. 18 - Prob. 17PSCh. 18 - Prob. 18PSCh. 18 - Prob. 19PSCh. 18 - Prob. 20PSCh. 18 - Prob. 1CPCh. 18 - Prob. 2CPCh. 18 - Prob. 3CPCh. 18 - Prob. 4CPCh. 18 - Prob. 5CPCh. 18 - Prob. 6CPCh. 18 - Prob. 7CPCh. 18 - Prob. 8CPCh. 18 - Prob. 9CPCh. 18 - Prob. 10CPCh. 18 - Prob. 11CP
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