A hedge fund manager is valuing Company AZT which has the following expected key financial measures for year-end 2021 (Table 2):

Table 2

Enterprise value	65000
Level of cash	4200
Level of interest bearing debt	15000
Minority interest	1200
Financial Investments	3200
Number of equity shares	3500
2021 Earnings Per Share (EPS)	3.15

Additionally, the hedge fund manager has the following information about a set of comparable listed companies with similar leverage and other fundamentals (Table 3):

Table 3

Company	current market price per share ()	EPS 2021 ()
B	5.5	2.0
C	4.8	1.3
D	4.1	1.1

For your answers, round computations to one decimal place (e.g. present 1.56 as 1.6).

1. What is the 2021 price/earnings multiple of company AZT implied in the asset managers expectations? Explain your answer.

[10 marks]

2. Consider only the information on the 2021 price/earnings multiple of the set of comparable companies. What is the conclusion about the relative valuation of company AZT? Explain your answer.

[10 marks]

3. Why is the expected dividend growth rate a relevant fundamental variable to take into account when using the price/earnings multiple? Explain your answer.

[5 marks]