Answer:
11.30%
Explanation:
Roten rooters have an equity multiplier of 1.52
The total assets turnover is 1.20
The profit margin is 6.2%
= 6.2/100
= 0.062
Therefore the ROE can be calculated as follows
= 0.062× 1.52×1.20
= 0.1130×100
= 11.30%
Hence the ROE is 11.30%
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?
Answer is b ...........................................................
Answer:
$45.54
Explanation:
Given that,
Stock of Flop Industries is trading at $37
Initial margin = 60 percent (short 400 shares sale)
Maintenance margin = 30 percent
Amount received from short sale:
= shares short × Stock trading price
= 400 × $37
= $14,800
Initial deposit:
= Amount received from short sale × Initial margin
= $14,800 × 60%
= $8,880
Account value = Amount received from short sale + Initial deposit
= $14,800 + $8,880
= $23,680
Margin call price:
= Account value ÷ [short sale + (short shares sale × maintenance margin)]
= $23,680 ÷ [400 + (400 × 30%)]
= $23,680 ÷ (400 + 120)
= $23,680 ÷ 520
= $45.54
Answer: Ke = 8% = 0.08
ROE = 10% = 0.10
Expected EPS = $6
Plowback rate ( b) = 40% = 0.40
Dividend per share (D) = 60%x $6 = $3.60
Po = D(1+g )/ke-g
Po = $3.6(1+0.04)/0.08-0.04
Po = $3.744/0.04
Po = $93.60
The current market price is $93.60
The price-earnings ratio = market price per share/Earnings per share
= $93.6/$6
= 15.6
The correct answer is C
Explanation: The price-earnings ratio is the ratio of market price per share to earnings per share. In this scenario, it is important to obtain the market price per share using the above formula. Thereafter, the market price per share is divided by the earnings per share. There is need to calculate the dividend per share based on the retention rate of 40%. since the retention rate is 40%, the dividend pay-out rate will be 60%. Thus, dividend is 60% of the expected earnings per share. The estimation of growth rate (g) is based on Gordon's growth model, which is g = r x b. r represents return on equity while b denotes the plowback(retention rate).
