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Alexus [3.1K]
4 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]4 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

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Answer:

Answer for the question:

Prepare the company’s direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced. (Round "Direct labor time per unit (hours)" and "Direct labor cost per hour" answers to 2 decimal places.)

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The correct answer to this open question is the following.

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However, trying to help you we can comment on the following.

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