Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find

image text in transcribed
image text in transcribed
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2019. Also assume that the firm's equity beta is 1.30, the risk-free rate is 2.55 percent, and the market risk premium is 7.0 percent. Dividends per share Return on equity Book value per share $ 2.22 9.50% $18.40 s 2019 value per share Average price multiple Forecasted growth rate Earnings Cash Flow $ 5.00 $ 6.50 13.10 9.51 13.57% 11.328 Sales $25.65 2.45 7.178 Using the PE, P/CF, and P/S ratios, estimate the 2020 share price for Beagle Beauties. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Share Price Using PE ratio Using P/CF ratio Using P/S ratio The required return is 12.40 percent. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual income model. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Share price

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Gapenskis Understanding Healthcare Financial Management

Authors: George H. Pink, Paula H. Song

8th Edition

1640551093, 978-1640551091

More Books

Students also viewed these Finance questions