For the upcoming year, earmings per share of company Roche AG are estimated at $

Question

For the upcoming year, earmings per share of company Roche AG are estimated at $267. For the upcoming year, earnings per share of company Roche AG are estimated at S267. Currently, the the share price is $6,250. Moreover, this company distributes 1 5% of its earnings as dividends. . What is the P/E ratio of this share? 2. Knowing that the dividend growth rate is 2% per year, conclude the stock expected rate ofreturn, using the Gordon Shapiro model. Interest rates for long-term investments are currently 6% per year. What should the dividend growth rate and the stock rate of return be, so the market price and the Gordon Shapiro model are appropriate? 3.

Explanation / Answer

1 P/E ratio = Price/eps 6250/267           23.41 2 Stock expected return = Dividend/Market price + Growth rate 267(15%)/6250 + 2% 2.64% 3 Assuming, stock should have at least 6% expected return that is equal to long term investment rate Its growth rate: Expected return - Dividend/price 6% - 267(15%)/6250 5.36%

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.