Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hello need help on this, the question is: estimate the firms PEG ratio based on fundamentals of Best Solutions Ever inc? will give review! Best

hello need help on this, the question is:
"estimate the firms PEG ratio based on fundamentals of Best Solutions Ever inc?"
will give review! image text in transcribed
Best Solutions Ever Inc. is an uprising star in the telecommunication equipment solution sector. The firm is expected to have a return on equity of 18%, in each of the following 5 years (year 1 to 5 including)after which the firm is expected to have a stable growth in their earnings of 4.6% a year (year 5+1 to Infinity) with an expected ROE of 12.1% During the high growth period (year 1 to 5 including), the firm's dividend payout ratio is expected to remain at the current level. Currently, the firm pays a dividend of $0.85 per share on earnings per share of $1.63. The cost of equity during the high growth period (year 1 to 5 including) is 15.19% and is expected to drop to 9,92% when the firm transitions in stable growth starting year 5.1 and is expected to remain at this level Assume growth is a function of (1 - dividend payout rate)ROE and everything which is not payed out as dividend of earnings per share is retained in the firm Round to two digits after the decimal

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

Parimutuel Applications In Finance New Markets For New Risks

Authors: Ken Baron, Jeffrey Lange

1st Edition

1403939500, 9781403939500

More Books

Students also viewed these Finance questions