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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

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Managing values in the workplace legitimizes managerial actions and strengthens the coherence and balance of the organization’
Juli2301 [7.4K]

Answer:

False

Explanation:

Managing values in the workplace legitimizes managerial actions and strengthens the coherence and balance of the organization's culture. ETHICS IMPROVES RELATIONSHIPS BETWEEN EMPLOYEES AND THE WORK GROUPS. THEY ULTIMATELY HELP TO ENHANCE THE PRODUCTS' QUALITIES AND TO CULTIVATE GREATER SENSITIVITY TO THE IMPACT OF THE CORPORATION'S VALUES AND MESSAGES.

7 0
3 years ago
If John made $23,562.55 in wages, and $2,679.32 cents in tips, what amount should he enter for his income when filling out his 1
Harrizon [31]

Answer:

Explanation:

$26,241.67

8 0
2 years ago
Read 2 more answers
the Bailey Brothers want to issue 20-year , zero coupon bonds that yield 9% .what price should it charge for these bonds if the
prohojiy [21]

Answer:

the amount charged is $178.43

Explanation:

The computation of the price charged is  shown below:

As we know that

Future value = Present value × (1 + rate)^number of years

So,

Present value = Future value ÷ (1 + rate)^no of years

= $1,000 ÷ (1 + 0.09)^20

= $1,000 ÷ 1.09^20

= $178.43

Hence, the amount charged is $178.43

6 0
3 years ago
Two investment advisers are comparing performance. Adviser A averaged a 20% return with a portfolio beta of 1.5, and adviser B a
Agata [3.3K]

Answer:

Option A is the correct answer.

A. Advisor A was better because he generated a larger alpha.

Explanation:

To determine which adviser would be the better stock selector, we will calculate the required rate of return of each adviser and the return actually averaged. The adviser with the greater abnormal return, which is return in excess of required rate, will be the better stock selector.

Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.

The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

  • rRF is the risk free rate
  • rM is the market return

r of Adviser A = 0.05 + 1.5 * (0.13 - 0.05)

r of Adviser A = 0.17 or 17%

Abnormal or excess return of Adviser A = 20% - 17% = 3%

r of Adviser B = 0.05 + 1.2 * (0.13 - 0.05)

r of Adviser B = 0.146 or 14.6%

Abnormal or excess return of Adviser B = 15% - 14.6% = 0.4%

Adviser A performed better as the excessive return or alpha of Adviser A was 3% while that of Adviser B was 0.4%

7 0
2 years ago
The government of country A has determined there is a coal shortage based on mining reports. As a result of these data, the gove
Gekata [30.6K]

The answer is: allocate resources.

Resource allocation refers to the act of managing the usage of assets that we own in order to achieve our goal.  In order to deal with a shortage, the common strategies that the government use usually revolve around either reducing the consumption of that commodity, reducing export, increasing our own production or increasing the purchase of that resource from other countries.

4 0
3 years ago
Read 2 more answers
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