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Calculate the earnings multiplier for Tesmar

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Reference no: EM132959493

Question - Tesmar Corp's current earnings per share is $6 and it has a return of equity is 12%. The management plans to indefinitely maintain its plowback ratio to 2/3. An annual dividend was just paid. Assume that next year's market return is 14% and T-bills offer 6%. If the stock has a beta of 1.50, answer the following questions:

Find the price at which Tesmar should sell?

Calculate the earnings multiplier for Tesmar?

Calculate PVGO. Is the firm deriving more value from assets in place or growth opportunities? Based on your analysis, make a recommendation to management to improve shareholder value.

Reference no: EM132959493

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