Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Deakin Ltd has just recently published following financial information: Expected earnings per share$20 Deakin's market beta0.8 Earnings per share to be retained by the firm30%
Deakin Ltd has just recently published following financial information:
Expected earnings per share$20
Deakin's market beta0.8
Earnings per share to be retained by the firm30%
Growth rate in earnings per share7% p.a.
Required:
1. Calculate Deakin's P/E ratio ifthe expected return on the ASX300 is 12% p.a. and the return on 10 year Commonwealth Government Bonds is 4% p.a.What does this ratio tell you?
2. Calculate Deakin's share price using P/E ratio calculated in Part 1.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started