Growth stock and p/e ratio , Business Economics

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Part 1: Show the P/E ratio for each company. Answer the question: Which of these two firms seems to be more of a "growth stock"? Explain the reasons for your choice.

Part 2: Obtain a forecast of each firm's expected earnings per share in the coming year under "Analysts Estimates". Show these estimates as part of your answer. Answer the question: What is the present value of growth opportunities for each firm as a fraction of the stock price? Show your work. The required rate of return on stocks for this exercise is r = 8%.

Part 3: Answer the following question in full and give your reasons: Are the relative values you obtain for PVGO consistent with the P/E ratios?

 

 


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