High Tech Chip Company is expected to have EPS in the coming year of 250 The

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. The expected ROE is 12.5%. An appropriate required return on the stock is 11%. If the firm has a plowback ratio of 70%, the growth rate of dividends should be A. 5.00%B. 6.25%C. 6.60%D. 7.50%E.8.75%12.5% X 0.7 = 8.75%. Difficulty: Easy 51. 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: Moderate 18-27
52. High Tech Chip Company paid a dividend last year of $2.50. The expected ROE for next year is 12.5%. An appropriate required return on the stock is 11%. If the firm has a plowback ratio of 60%, the dividend in the coming year should be Difficulty: Moderate
Chapter 18 - Equity Valuation Models 53. Suppose that the average P/E multiple in the oil industry is 20. Dominion Oil is expected to have an EPS of $3.00 in the coming year. The intrinsic value of Dominion Oil stock should be _____. Difficulty: Easy 54. Suppose that the average P/E multiple in the oil industry is 22. Exxon Oil is expected to have 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 above 22 X $1.50 = $33.00. Difficulty: Easy 18-29
55. Suppose that the average P/E multiple in the oil industry is 16. Mobil Oil is expected to have an EPS of $4.50 in the coming year. The intrinsic value of Mobil Oil stock should be _____. 16 X $4.50 = $72.00. Difficulty: Easy
Chapter 18 - Equity Valuation Models 56. Suppose that the average P/E multiple in the gas industry is 17. KMP is expected to have an EPS of $5.50 in the coming year. The intrinsic value of KMP stock should be _____. Difficulty: Easy 57. An analyst has determined that the intrinsic value of HPQ stock is $20 per share using the capitalized earnings model. If the typical P/E ratio in the computer industry is 25, then it would be reasonable to assume the expected EPS of HPQ in the coming year is ______. Difficulty: Easy 18-31
58. An analyst has determined that the intrinsic value of Dell stock is $34 per share using the capitalized earnings model. If the typical P/E ratio in the computer industry is 27, then it would 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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