A fan has a stock price of $54.75 per share. Hr firms earnings, are $75 million.

Question

A fan has a stock price of $54.75 per share. Hr firms earnings, are $75 million. and the firm has 20 million shares outstanding. The firm has an ROE of 15% and a plowback of 65%. What is the firm's PEG ratio? 1.5 1.25 1.1 1.0 ART has come out with a new and improved product. As a result the firm projects an ROE of 25%. and it will maintain a plowback ratio of 20. Its earning this year will be $3 per share. Investors expect a 12% rate of return on the stock. What price do you expect ART shares to sell for in 4 years? $53.96 $44.95 $41.68 $39.76 The free cash flow to the firm is reported as $198 million. The interest expense to the firm is $15 million. If the tax rate is 35% and the net debt of the firm increased by $20 million, what s the approximate market value of the firm if the FCFE grows at 3% and the cost of equity is 14%? $1,950 billion $2,497 billion $2,585 billion $3,098 billion In 2006 Hewlett-Packard repurchased shares of common stock worth $5.241 million and made dividend payments of $894 million Other financing activities raised $196 million and Hewlett-Packard's total cash flow from financing was -$6.077 million. How much did the long-term debt accounts of Hewlett- Packard change? A Increased $i38 million Decreased $138 million Increased $836 million Decreased $836 million

Explanation / Answer

9 Answer

Sustainable Growth Rate ROE x Plowback Ratio
15%*.65 9.75% EPS EPS=75/20 3.75 P/E ratio Market Value per Share/ Earnings per Share 54.75/3.75 14.6 PEG Ratio P/E ratio ÷ Annual EPS Growth
14.6/9.75 1.50

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