Question
Ascent Corporation has a net income of $320,000 on sales of $3,000,000. The firm has total assets of $2,000,000 and the book value of equity
Ascent Corporation has a net income of $320,000 on sales of $3,000,000. The firm has total assets of $2,000,000 and the book value of equity is $1,600,000. It has just paid a dividend of $1.10 per share to maintain a payout ratio of 55 percent. The 90-day government T-bill yield is 5.25 percent. Determine the following if the firm's P/E ratio is 10:
A)The number of shares outstanding: 160000
B)Sustainable growth rate: 9%
C)Leading earnings per share: EPS1: $ 2.18
D)Estimated price of the stock today: E)Required rate of return: F)Risk premium of the stock:
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