P/E and Growth Daisy Pixie Stix pays out 60% of its earnings as dividends. The f
ID: 2798734 • Letter: P
Question
P/E and Growth Daisy Pixie Stix pays out 60% of its earnings as dividends. The firm has been earnings $0.12 cents per dollar of equity invested in the firm and investors require a 10.25% return. The last annual earnings were $5.00 per share. What is the P/E ratio of the stock?
21.70
32.04
19.68
11.01
P/E and Value JJ Industries retains 40% of its income. Last year's EPS was $1.70 and ROE is 16%. Investors require a 14% return on this stock. What is the intrinsic value of the stock?
$13.33
$15.95
$10.88
$11.67
Free Cash Flow to Equity This year a firm has FCFF of $14.50 million. The firm has interest expense of $8 million and is in a 39% tax bracket and debt increased by $3 million. The firm's free cash flow to equity is ____________ million.
$12.62
$9.62
$3.50
$14.50
Explanation / Answer
1)
growth in dividends=(0.12/1)*(1-60%)=4.80%
price of stock=(5*60%*(1+4.80%))/(10.25%-4.80%)=57.69
P/E=57.69/(5*(1+4.8%))
=11.01
the above is the answer
we do only one question based on Chegg rule.
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