Estimate of an appropriate price range for shares of garp

Assignment Help Financial Management

Reference no: EM131054533

Garret Simpson Investments is evaluating a firm (Garp, Inc.) for recommendation to its clients and trying to evaluate the firm's current stock price. The firm is about to offer its shares to the public and had earnings last year of $2.50 a share, which the analysts believe is expected to grow by 20% next year. Similar firms in the industry are currently selling for price-earnings ratios ranging from ten to fifteen times current period earnings. However, these competitor firms are already public entities and have relatively low growth expectations for their earnings. What is your estimate of an appropriate price range for the shares of Garp? Defend your answer.

Reference no: EM131054533

Questions Cloud

Minimum variance portfolio and efficient portfolios : Portfolio Risk and Return Today, the stock price of company A is $40 and the stock price of company B is $50. You estimate that the two stocks will have the following prices one year from now, conditional on the state of the economy: Minimum Variance..

What is the net asset value of an investment company : What is the net asset value of an investment company with $15,000,000 in assets, $760,000 in current liabilities, and 1,000,000 shares outstanding?

About the incremental rate of return : A fleet manager must choose between two trucks to purchase for a company's fleet. The company will keep either truck for 4 years. Truck A costs $28,000 and has a market value of $16,000 after 4 years. Truck B costs $33,000 and has a market value of $..

What will be length of the cash cycle after these changes : A company currently has a 51 day cash cycle. Assume the firm changes its operations such that it decreases its receivables period by 3 days, increases its inventory period by 4 days, and increases its payables period by 1 day. What will be the length..

Estimate of an appropriate price range for shares of garp : Garret Simpson Investments is evaluating a firm (Garp, Inc.) for recommendation to its clients and trying to evaluate the firm's current stock price. The firm is about to offer its shares to the public and had earnings last year of $2.50 a share, whi..

Correlation coefficient between the returns of the two stock : The covariance of the returns between Willow stock and Sky stock is 0.0740. The variance of Willow is 0.1310 and the variance of sky diamond is 0.1130. What is the correlation coefficient between the returns of the two stocks?

Diversified investments : Diversified Investments. Hofstra, Inc., has no European business and has cash invested in six European countries, each of which uses the euro as its local currency. Are Hofstra’s short-term investments well diversified and subject to a low degree of ..

Find the present equivalent value : The property appraisal office for Mobile County has just installed new software to track residential market values for property tax computations. The manager wants to know the total equivalent cost of all future costs incurred when the county commiss..

Compute the present value : Compute the present value of an $900 payment made in 9 years when the discount rate is 11 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Present value $

User Account

All Pages