#11:

A. Spahr Cosmetics just hired a financial analyst, Mr. William, the new financial analyst wanted to conduct a comprehensive P/E analysis for Spahr Cosmetics. First, Mr. William forecasts earnings per share next year to be $3.25. book value per share of is $2 and dividends is expected to grow at a 3% rate indefinitely. The market becomes more riskier, so Spahr Cosmetics investors require a return of 15.0%. What is the no-growth value of Spahr Cosmetics stock?

1. $21.67
2. $13.33
3. $27.08
4. $25.78

B. If Spahr Cosmetics stocks price is currently $50, what is the present value of growth opportunities (PVGO) using information provided in question #11?

1. $28.33
2. $36.66
3. $22.92
4. 24.22

C. What is the implied P/E ratio for Spahr Cosmetics stock (Please use any necessary information from question # 11)?

1. 13.56%
2. 14.09%
3. 15.38%
4. 17.44%