1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Alexus [3.1K]
3 years ago
10

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

n a plowback ratio of 0.03. Its earnings this year will be $2 per share. Investors expect a 12% rate of return on the stock.
Business
1 answer:
TEA [102]3 years ago
6 0

Answer:

Price $17

PE ratio 8.5 times

Explanation:

As per given data

ROE = 20%,

Plowback ratio = b= 0.03,

EPS = $2,

k= 12%

As plowback referr to the retentrion value, deducting its effect from EPS

Dividend= EPS × ( 1 − b ) = $2 × ( 1 −0.03 )= $1.94

Growth = ROE x b = 20% x 0.03 = 0.006 = 0.6%

Using Dividendvaluation method we will calculate the price.

Price  = Dividend  / (Rate of return - Growth rate )

Price  = $1.94  / ( 12% - 0.6% ) = $17

P / E Ratio = Price / EPS = $17 / $2 = 8.5

You might be interested in
f pressure is put on the government to maintain a balanced budget during a recession. In this scenario, government would need to
Kitty [74]

Answer:

Increase

fall

Explanation:

A recession occurs when the gross domestic product of a country for two consecutive quarters is negative.

Annually balanced budget is a budget where at the end of every year, revenue must equal expenditure.

If in a recession, a government is under pressure to maintain a balanced budget, the government would need to increase taxes. this is because income would be less than government expenditure as a result of the recession. In order to maintain a balanced budget, the government can either increases taxes are reduce expenditure.

When taxes are increased, disposable income falls and this causes aggregate demand to fall

4 0
3 years ago
Most processing in a computer takes place in a component called the _____ processing unit.
Lerok [7]
<span>Most processing in a computer takes place in a component called the __CPU___ processing unit.</span>
3 0
3 years ago
In order for the economy to be strong, businesses must _____.
Arte-miy333 [17]

<u>Answer:</u>  A) Produce goods and pay labour.

<em>In order for the economy to be strong, businesses must produce goods and pay workers</em>

<u>Explanation:</u>

<em>Organizations charge more for their merchandise to pay higher wages, and the higher wages</em> likewise increment the cost of products in the more extensive market.  

The <em>rate increment of the wages and costs and their general impact available are key variables driving expansion in the economy.</em>

5 0
3 years ago
Read 2 more answers
How do economists and bankers determine how much the money supply will increase with each deposit?
mamaluj [8]
They can look at the revenue receipt.

Money supply refer to the entire liquid instruments that a country or an entity have at a specific period of time. By looking at the revenue receipt, they can determine whether the revenue will be in the form of liquid instrument such as cash , short term investment, etc or in the form of receivable<span />
4 0
3 years ago
If Alex deposits $1,000 from her paycheck into her checking account and, at the same time, increases her credit card balance by
Marina86 [1]

Answer:

option (A) -$500; decreases by $500

Explanation:

Data provided in the question:

Amount deposited = $1,000

Increase in credit card balance = $1,500

Now,

Deposit adds to assets whereas increase in credit card balances adds to liabilities

Therefore,

Savings = Deposits - Increase in credit card balances

= $1,000 - $1,500

= - $500

Here,

negative sign depicts the decrease in wealth

Hence,

The correct answer is option (A) -$500; decreases by $500

8 0
3 years ago
Other questions:
  • Why is knowledge of the key success factors in an industry important?
    11·1 answer
  • The management staff at Doc's Motorcycles believes the company has a social responsibility to its community. They believe that t
    14·1 answer
  • What is the correct percentage of texas teachers charged with ethics violations each year?
    7·1 answer
  • "at rogopt, a multinational e-commerce site, the human resources department sends out emails to all its branches whenever there
    8·1 answer
  • An investor holds two bonds, one with 5 years until maturity and the other with 20 years until maturity. Which of the following
    9·1 answer
  • Marketers segment broad markets into smaller target segments based on a variety of _____.
    11·1 answer
  • . Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business. To bu
    6·1 answer
  • Free pointsvguf dhscjbf hcjn
    11·2 answers
  • Suppose the government applies a specific tax to a good where the demand elasticity, E, is -1.4, and the supply elasticity, n, i
    9·1 answer
  • What kind of cloth is used in wiping spilled oils during cleaning?​
    12·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!