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DanielleElmas [232]
3 years ago
11

Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will mai

ntain a plowback ratio of 0.30. Its projected earnings are $4 per share. Investors expect a 13% rate of return on the stock. At what price and P/E ratio would you expect the firm to sell?
Business
2 answers:
valentinak56 [21]3 years ago
6 0

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Tamiku [17]3 years ago
5 0

Answer:

Price = $40

P/E ratio = 10 times

Explanation:

The formula to compute the price earning ratio is shown below:

Price-earnings ratio = (Market price per share) ÷ (Earning per share)

where,

Market price per share = Next year dividend ÷ (Required rate of return - growth rate)

Next year dividend equal to

= Earnings × (1 - plow back ratio)

= $4 × (1 - 0.30)

= $2.8

Growth rate is = 20% × 0.30 = 6%

And, the required rate of return is 13%

So, the market price per share would be

= 2.8% ÷ (13% - 6%)

= $40

Now the price earning ratio would be

= $40 ÷ $4

= 10 times

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4 years ago
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Answer:

private prison enterprise

Explanation:

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In order to generate money as a private jail, the firm gets into a contract with the government. This contract should indicate the basis for payment to the company. It might be based on the size of the jail, based on a monthly or annual predetermined sum, or in most situations, it is paid depending on the number of convicts that the prison holds.

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6 0
3 years ago
"Dubas Co. is a U.S.-based MNC that has a subsidiary in Germany and another subsidiary in Austria. Both subsidiaries frequently
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Answer:

$525,000

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Explanation:

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3 years ago
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