Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P/E Ratio problem Looking at this problem Formula: ln (x) = (No of years superior growth antecipated) * ln {(1+Annual growth rate)/(1+market rate)} a. the

P/E Ratio problem

Looking at this problem Formula:

ln (x) = (No of years superior growth antecipated) * ln {(1+Annual growth rate)/(1+market rate)}

a. the next 10 years ln(x)=10*ln(1.18/1.08) =10*0.08855 =0.8855 So, x=2.4242 P/E=2.4242 * market multiple =2.4242*18 =43.6355

I see the 10*In(1.18/1.08) which is 10*In(1.0925), I CAN'T FIGUERE OUT WHERE YOU GET 10*.08855??

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_2

Step: 3

blur-text-image_3

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

More Books

Students also viewed these Finance questions