Hi, please help me with this question. Be clear with explanation if possible bec

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Hi, please help me with this question. Be clear with explanation if possible because I need to present this to my class. Thank you!!!
Lauren Entertainment, Inc. has an 18 percent annual growth rate compared to the market rate of 8 percent. If the market multiple is 18, determine P/E ratios for ratios for Lauren Entertainment, Inc., assuming its beta is 1.0 and you feel it can maintain its superior growth rate for:
a. The next 10 years.
b. The next 5 years.
Hi, please help me with this question. Be clear with explanation if possible because I need to present this to my class. Thank you!!!
Lauren Entertainment, Inc. has an 18 percent annual growth rate compared to the market rate of 8 percent. If the market multiple is 18, determine P/E ratios for ratios for Lauren Entertainment, Inc., assuming its beta is 1.0 and you feel it can maintain its superior growth rate for:
a. The next 10 years.
b. The next 5 years.
Hi, please help me with this question. Be clear with explanation if possible because I need to present this to my class. Thank you!!!
Lauren Entertainment, Inc. has an 18 percent annual growth rate compared to the market rate of 8 percent. If the market multiple is 18, determine P/E ratios for ratios for Lauren Entertainment, Inc., assuming its beta is 1.0 and you feel it can maintain its superior growth rate for:
a. The next 10 years.
b. The next 5 years.
Hi, please help me with this question. Be clear with explanation if possible because I need to present this to my class. Thank you!!!
Lauren Entertainment, Inc. has an 18 percent annual growth rate compared to the market rate of 8 percent. If the market multiple is 18, determine P/E ratios for ratios for Lauren Entertainment, Inc., assuming its beta is 1.0 and you feel it can maintain its superior growth rate for:
a. The next 10 years.
b. The next 5 years.

Explanation / Answer

You may notice that market growth rate stands at 8% while the company has seen a growth rate of 18% as of now. This implies that the company might be one of the new entrants or the company has a new product, due to which it is able to grow at higher rate. Due to the enhanced growth in Lauren, other players (either new players or existing players) shall directly compete with Lauren and help in converging the growth rate of the company with market's growth rate. Its beta being on the lower side implies that it is in as volatile as the market thereby in low risk space with low market disruptions such as FMCG, thereby we may conclude that superior returns may not be possible for more thatn next 5 years. I have picked the lower period option due to the explaination given above. Coming to P/E ratios, information provided is not sufficient.

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