Question
11. Nat-T-Cat Industries just went public. As a growing firm, it is not expected to pay a dividend for the first five years. After that,
11. Nat-T-Cat Industries just went public. As a growing firm, it is not expected to pay a dividend for the first five years. After that, investors expect Nat-T-Cat to pay an annual dividend $1.00 per share (i.e., D6 = 1.00), with no growth. If the required return is 10%, what is the current stock price?
17. The projected earnings per share for Risky Ventures, Inc. is $3.50. The average PE ratio for the industry composed of Risky Ventures closest competitors is 21. After careful analysis, you decide that Risky Ventures is a little more risky than average, so you decide a PE ratio of 23 better reflects the markets perception of the firm. Estimate the current price of the firms stock.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started