Ale Corporation had net income of $240,000 and paid dividends to common stockholders of $40,000 in 2017. The weighted average nu
mber of shares outstanding in 2017 was 60,000 shares. Ale Corporation's common stock is selling for $76 per share on the New York Stock Exchange. Ale Corporation's price-earnings ratio is?
2 answers:
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Answer:
18.54%
Explanation:
The computation of the project modified IRR is shown below:
Here we use the spreadsheet for determining the IRR
but before that we need to find out the cash inflows
Years Amount (in dollars)
Year 0: = - $278,191.12
($236,000 - $48,000 ÷ 1.13^4 -$30,000 ÷ 1.13^7)
Year 1: 64000
Year 2: 87000
Year 3: 91000
Year 4: 0
Year 5: 122000
Year 6: 154000
Year 7: 0
Now we use the excel
=IRR({-$278,191.12,$64,000,$87,000,$91,000,$0,$122,000,$154,000,0})
= 18.54%
