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VARVARA [1.3K]
3 years ago
11

ART Inc. has come out with a new and improved product. As a result, the firm projects an ROE of 25% a year until the end of year

3 and 15% a year afterwards, and it will maintain a plowback ratio of 20%. Its earnings in the coming year, i.e., E1, will be $3 per share. Investors expect a 12% rate of return on the stock. What would be its P0/E1 ratio?
Business
1 answer:
mrs_skeptik [129]3 years ago
6 0

Answer:

$11.43

Explanation:

In order to determine the price to earnings ratio, we need to know what the price (p0) would be

price can be determined using the constant growth dividend model

according to the constant dividend growth model

price = d1 / (r - g)

d1 = next dividend to be paid

r = cost of equity

g = growth rate

Sustainable growth rate is the rate of growth a company can afford in the long term

sustainable growth rate = plowback rate x ROE

0.25 x 0.2 = 0.05 = 5%

dividend = payout ratio x earnings

Payout ratio = 1 - retention rate

1 - 0.2 = 0.8

0.8 x 3 = $2.4

$2.4 / 0.12 - 0.05 = $34.29

P / E = $34.29 / $3 = $11.43

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B2C stands for business to consumer. This would be the sales you’d make to a consumer. B2B stands for business to business. This is the sales you’d make with another business.
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3 years ago
Wanda’s will power is 25% in convincing people to vote for her. She needs 50% of the vote to win. Assuming everyone votes, in or
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Answer:

34 % of the people must already planning to vote for Wanda

Explanation:

Let there are 100 people in the town

It is given that Wanda will convince 25 % of people vote for her

Now let there are x people who are planning to vote Wanda

Then 100-x people are not planning to vote Wanda

She have to convince 0.25 ( 100-x) people to get 50% of the vote and to win

So 0.25(100-x)+x=50

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8 0
3 years ago
The ______ approach is a management approach that advocates the idea that a manager's attitude toward employees can affect produ
padilas [110]

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Human Relations Approach

Explanation:

According to my research on studies conducted by various sociologists, I can say that based on the information provided within the question the approach being described is called the Human Relations Approach. Like mentioned in the question this approach refers to the view that the effectiveness of any organisation depends on the quality of relationships among the people working in the organisation.

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4 0
4 years ago
Which mall should the company choose if revenues are expected to be $6,000,000 per year?
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3 0
3 years ago
Read 2 more answers
"Gamboa, Inc. sold 100 selfie sticks for $25 each. If the selfie sticks had an average cost of $1 to produce, how much profit di
IRISSAK [1]

Answer:

$2400

Explanation:

Average cost is the ratio of total cost of production to the total number of units produced, it is the sum of both the average fixed cost and the average variable cost. The average cost is given by the formula:

Average cost = Total cost / number of units.

Given that:

The total number of units produced = 100 selfie sticks, Average cost = $1 and Price of each selfie stick = $25

From Average cost = Total cost / number of units.

Substituting gibes:

$1 = Total cost / 100 selfie stick

Total cost = $1 × 100 = $100

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Revenue = $25 × 100 = $2500

Profit = Revenue - Total cost

Profit = $2500 - $100 = $2400

Total cost = $2400

5 0
3 years ago
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