Question
Based on your analysis, Omuomu pty., ltd., is likely to earn an EPS of $5 this financial year and pay $2 of dividend. This equates
Based on your analysis, Omuomu pty., ltd., is likely to earn an EPS of $5 this financial year and pay $2 of dividend. This equates to 10% decline in the EPS from the previous year but 5% increase from 3 years ago. You noticed that the company's book value per share was $100 in the previous year and the current price-to-earnings (PE) ratio is 20x. You believe that the PE ratio is the best measure to value the company's share and believe that its fair PE ratio is 21x. Which one of the following do you think is the closest to the fair value of its share (assume all other financial statement items remain unchanged from the previous financial year)?
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