Using the approach for the valuation of a supernormal growth

firm. compute the value of Gilbert Enterprises stock. Round all

values in the computation to two places to the right of the

decimal point. Does the firm appear to be under or overvalued?

2. Examine the data in Figure 1 and indicate whether the firms P/E

ratio appears to be appropriate in light of other firms in the

industry.

3. Based on the answers to questions 1 and 2, what

recommendation would you suggest that Albert Roth make?

Tom Gilbert. founder and chaimum of the board of Oiltent Enterprises, oowid not believe his eyes as he reat the qume about his firm in Me Nowl Sireet Journal. The soock had closed it 35 1/4, down 3 3/4 points for the week. He called his vise president of finisce, lane Amald, und they apred to maxt ob Salunflay norming if 9.00am. foe tereak fast. When Jane amed, Akry neviewod the nock's perfommence fior the last few months. Altoopht the nock opened the your (2016) if 28% \%er share, in had reshed a hight of 50 in March, but had theuglit the acke was undervalued in the marketplaee and were sonomb coscoderine in meneuncement the the firm was poing is repurchane is w ver million of is oen shares in the epen market begitnity on lune 1 of 2016 . They though thet would send on mexper to invecon sart the marbet lad placed the stuck at in unrealititeally low leved. Hefore taking any aktioen they decided to eensult with their imvesment fariting vies president at the invedment tanking firm of Baker, Crves and Rech Not had woded the firm in initally selling its steck to the palie (poine public) fre yeare as call during at early Sanintry monieg rowind of golf at the courery dhat k in a dect nopurthase The Firm's Busines Gilen Enerpices was the thind lerpee relates to flably arw can. Ahent Res biers bocomity intreaingh importare His meseurch infiented thar the armer. year is sots op fon a nem vechick poir iscrease hal for morpened the riee in somaner movere hople are nime firsed so heep their eld con linger whesther they wam to or net. Furthermore, Iegielation lan mandined nene Valuatien period was entinfly wasonalle. After that tione wpan, a mowe nomsal powth nate ase a discont of required rate of retem (K. of 18 percent. He discassed thes approach with his partnes and while they penenally apeod. fim's protecanings ratio io other firms in the indunry. Mice-eanings dea along wib ober information ate thews in Figure I fer Celbert Emerprises at thes esther firma in the industry