Question
ABC Industries is a fast growing company with earnings growth expected of 18% for the next 5 years Since it has high growth you can
ABC Industries is a fast growing company with earnings growth expected of 18% for the next 5 years Since it has high growth you can find the appropriate P/E by using a PEG approach knowing that a PEG of 2 is acceptable Similarly, you have been told by your colleague that the company, given its strong earnings growth should be valued using a multiple that is an 80% premium to the market multiple Your estimate is that the market multiple will be 20x Given that your forecast for 2024 EPS is $10. What is your valuation for the shares today if the required rate of return per CAPM is 12%? Assume that it is the end of 2021 and that the company does not pay a dividend
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