What is the price-earnings ratio of the company

Assignment Help Financial Management

Reference no: EM131901968

1) Eastern Electric currently pays a dividend of about $1.78 per share and sells for $27 a share. If investors' required rate of return is 15%, what must be the growth rate they expect of the firm? Growth rate __ %

2) Here are data on two stocks, both of which have discount rates of 10%

	Stock A			Stock B
Return on equity		10	%		8	%
Earnings per share	$	1.20		$	1.50
Dividends per share	$	.60		$	.60

The earnings per share and the dividends per share represent Year 0 values.)

a. What are the dividend payout ratios for each firm?

b. What are the expected dividend growth rates for each firm?

c. What is the proper stock price for each firm?

3) No-Growth Industries pays out all of its earnings as dividends. It will pay its next $4 per share dividend in a year. The discount rate is 11%.

What is the price-earnings ratio of the company?

What would the P/E ratio be if the discount rate were 10%?

Reference no: EM131901968

Questions Cloud

Measure of well-being and welfare of a nation : Discuss what the shortcomings (limitations) of GDP as a measure of well-being and welfare of a nation are?

Increase long run standards of living : If you are advising the government on how it spend money and you want to increase long run standards of living, what advice do you give regarding tax cuts?

What is appropriate amount of the monthly payment : The lessor is computing the appropriate monthly lease payment. The fair value of the leased asset is $75,000. What is appropriate amount of the monthly payment?

Federal reserve is in process of purchasing : This release also states that the Federal Reserve is in process of purchasing 1.25 trillion of agency mortgage-backed securities and about $175 billion.

What is the price-earnings ratio of the company : What is the price-earnings ratio of the company? What would the P/E ratio be if the discount rate were 10%?

Analyze the impact of technology on how health care services : Analyze the impact of technology on how health care services are delivered. The impact of technology on employee performance and organizational structure

Prepare schedule assigning each activitys overhead cost pool : Prepare a schedule assigning each activity's overhead cost pool to each service based on the use of the cost drivers.

What did you learn-why is it important : What did you learn? Why is it important? How do the Economics concepts we just covered impact the economy, you and your family, your friends and your employer?

Difference between extrinsic and intrinsic motivation : What is the difference between extrinsic and intrinsic motivation? Give some examples of outcomes associated with each of these.

User Account

All Pages