Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Currently, 2/2/2023, Tesla's (TSLA) P/E ratio is 60, and its EPS is $3.03. You are considering an investment in TSLA with a time frame of

Currently, 2/2/2023, Tesla's (TSLA) P/E ratio is 60, and its EPS is $3.03. You are considering an investment in TSLA with a time frame of 10-years. Your required return is 15% per year (TSLA beta is 2, which means it is twice as volatile as the market). You expect TSLA's P/E ratio to be around 20 as competition should catch up and TSLA should be less of a growth company. How fast should earnings per share (EPS) grow per year for you to achieve your investment objective? Be sure to show your steps.

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

Grow Your Small Business Profits How I Find A 100K In Any Business In 45 Minutes

Authors: Sharon Coleman

1st Edition

B0C9S9CCZJ, 979-8850917258

More Books

Students also viewed these Finance questions