# High tech chip company is expected to have eps in the

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50. High Tech Chip Company is expected to have EPS in the coming year of \$2.50. Theexpected ROE is 12.5%. An appropriate required return on the stock is 11%. If the firm has aplowback ratio of 70%, the growth rate of dividends should beA.5.00%B.6.25%C.6.60%D.7.50%E.8.75%12.5% X 0.7 = 8.75%.
Difficulty: Easy51. A company paid a dividend last year of \$1.75. The expected ROE for next year is 14.5%.An appropriate required return on the stock is 10%. If the firm has a plowback ratio of 75%,the dividend in the coming year should be
Difficulty: Moderate18-27
52. High Tech Chip Company paid a dividend last year of \$2.50. The expected ROE for nextyear is 12.5%. An appropriate required return on the stock is 11%. If the firm has a plowbackratio of 60%, the dividend in the coming year should be
Difficulty: Moderate
Chapter 18 - Equity Valuation Models53. Suppose that the average P/E multiple in the oil industry is 20. Dominion Oil is expectedto have an EPS of \$3.00 in the coming year. The intrinsic value of Dominion Oil stock shouldbe _____.
Difficulty: Easy54. Suppose that the average P/E multiple in the oil industry is 22. Exxon Oil is expected tohave an EPS of \$1.50 in the coming year. The intrinsic value of Exxon Oil stock should be_____.A.\$33.00B.\$35.55C.\$63.00D.\$72.00E.none of the above22 X \$1.50 = \$33.00.
Difficulty: Easy18-29
55. Suppose that the average P/E multiple in the oil industry is 16. Mobil Oil is expected tohave an EPS of \$4.50 in the coming year. The intrinsic value of Mobil Oil stock should be_____.
Difficulty: Easy
Chapter 18 - Equity Valuation Models56. Suppose that the average P/E multiple in the gas industry is 17. KMP is expected to havean EPS of \$5.50 in the coming year. The intrinsic value of KMP stock should be _____.
Difficulty: Easy57. An analyst has determined that the intrinsic value of HPQ stock is \$20 per share using thecapitalized earnings model. If the typical P/E ratio in the computer industry is 25, then itwould be reasonable to assume the expected EPS of HPQ in the coming year is ______.
Difficulty: Easy18-31
58. An analyst has determined that the intrinsic value of Dell stock is \$34 per share using thecapitalized earnings model. If the typical P/E ratio in the computer industry is 27, then itwould be reasonable to assume the expected EPS of Dell in the coming year is ______.A.\$3.63B.\$4.44C.\$14.40D.\$1.26E.none of the above\$34(1/27) = \$1.26.
Difficulty: Easy
Chapter 18 - Equity Valuation Models

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