Reference no: EM132666967
PPG is expected to earn $4 per share in one year. The market demand for the new product is expected to be high so PPG decides to retain 60% of its earnings in year 1, 2, and 3. The reinvestments are expected to generate 10% return. Starting from year 4, PPG will maintain an 60% dividend payout rate because the investment return is expected to decline to 5% due to increased competition from similar products. (round to two decimal places for all the answers)
Problem a. What is the earnings growth rate for year 1 to 2, year 2 to 3, and year 3 to 4?
Problem b. What is the long term growth rate after year 4?
Problem c. Calculate the earnings per share for year 1, 2, 3, 4, and 5.
Problem d. Calculate the dividend per share for year 1, 2, 3, 4, and 5.
Problem e. If the cost of equity capital is 4%, find the current share price.
Problem f. PPG manager decides to try alternative valuation method based on multiples from the industry peers. The average forward P/E ratio (i.e., price divided by earnings in the coming year) of the same industry is 30. What is should be the per share price of PPG based on the P/E ratio?
|
Prepare cash basis statement for the month of september
: Prepare the accrual basis income statement and the cash basis statement for the month of September. Issued common stock and received $225,000 in cash.
|
|
What is vail outstanding balance
: Vail Ski Shop received a $1,221 invoice dated July 28 with 2/10, 1/15, n/60 terms. On August 11, Vail sent a $505 partial payment.
|
|
Explain what issue should be added to the list today
: Post an explanation of which setting or issue you believe should remain on the list and why. Next, explain what issue should be added to the list today.
|
|
Which of the statements regarding company a is incorrect
: Which of the statements regarding Company A is INCORRECT? If Company A has fixed costs of $923,400 a selling price of $57 per unit
|
|
What is the long term growth rate after year
: What is the earnings growth rate for year 1 to 2, year 2 to 3, and year 3 to 4? Calculate the earnings per share for year 1, 2, 3, 4, and 5.
|
|
Why the strategy will yield a risk-free profit
: Your boss is worried that the trading strategy involves short-selling bond C which might expose the firm to future cash-outflows
|
|
Long-short bond arbitrage trading strategy
: Explain to your colleague why the strategy is not "risk-free" as we would expect from an arbitrage trading strategy.
|
|
Qualitative approaches
: Analyze and describe any two types of qualitative research methods. key fundamental differences between experimental and quasi-experimental designs.
|
|
How much is the commercial value of the document
: The Consortium wants to know the commercial value of this document 8 months before its expiration. How much is the commercial value of this document?
|