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18 You have been asked to estimate the growth rates and P/E ratio for Kids Soft, a software firm that has the following characteristics Beta
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You have been asked to estimate the growth rates and P/E ratio for Kids Soft, a software firm that has the following characteristics Beta 1.5 5% 6.5% 28.5714% 8.3333% Risk free rate = Treasury bond rate Market Risk Premium (MRP) Return on Equity (ROE) in first 5 years Return on Equity (ROE) after 5 years Beta Dividend payout ratio in first 5 years Dividend payout ratio after 5 years 1.3 30% 40% 18 of 40 What is your estimate to the PE ratio for a firm that has the same characteristics? O A. 6.68x OB. 7.11x O C. 8.24x OD. 8.79x O E. None of the above Unsure Step by Step Solution
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