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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Term
Fall
Professor
HENDRIX
Tags
Valuation, Dividend yield, P E ratio, Equity Valuation Models

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