Question
Flipmart is a renowned e-commerce company since last 20 years. Last year the firm reported net income of $25 million on revenues of $200
Flipmart is a renowned e-commerce company since last 20 years. Last year the firm reported net income of $25 million on revenues of $200 million last year and equity invested of $80 million. The firm paid out 15% of its earnings as dividends and is expected to maintain this payout ratio for the next five years. The growth rate is expected to drop to 5% after the fifth year with the constant return on equity. The beta of Flipmart is maintained at 1.4 in perpetuity. With the risk-free rate of 5% and market risk premium of 6%, find out the following: A. Price-earnings ratio B. Price-to-sales ratio C. Market value of equity
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