Question
S.I.D. Company begins its fiscal year with a Book Value of 100,000,000 has 4 million shares outstanding. Its Market Value is at a 16% premium
S.I.D. Company begins its fiscal year with a Book Value of 100,000,000 has 4 million shares outstanding. Its Market Value is at a 16% premium to book. What are market and book values per share?
Assume SIDs ROE for the year is 22%. What are its earnings and eps?
Its payout ratio is 40%. What are dividends-per-share?
Extra credit: Because of SIDs handsome earnings, investors increase the premium of market over book value to 20% at year-end. What would be the Rate of Return had an investor purchased shares of SID at the start of the year and held for the year? Remember you need to calculate book value-per-share at year-end first.
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