Suppose that the average pe multiple in the oil

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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_____.A.$28.12B.$35.55C.$63.00D.$72.00E.none of the above16 X $4.50 = $72.00.
Difficulty: Easy18-22
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: Easy58. 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 ______.
Difficulty: Easy18-23
Chapter 18 - Equity Valuation Models59. An analyst has determined that the intrinsic value of IBM stock is $80 per share using thecapitalized earnings model. If the typical P/E ratio in the computer industry is 22, then itwould be reasonable to assume the expected EPS of IBM in the coming year is ______.A.$3.64B.$4.44C.$14.40D.$22.50E.none of the above$80(1/22) = $3.64.
Difficulty: Easy60. Old Quartz Gold Mining Company is expected to pay a dividend of $8 in the coming year.Dividends are expected to decline at the rate of 2% per year. The risk-free rate of return is 6%and the expected return on the market portfolio is 14%. The stock of Old Quartz Gold MiningCompany has a beta of -0.25. The intrinsic value of the stock is ______.
Difficulty: Difficult18-24
Chapter 18 - Equity Valuation Models61. Low Fly Airline is expected to pay a dividend of $7 in the coming year. Dividends areexpected to grow at the rate of 15% per year. The risk-free rate of return is 6% and theexpected return on the market portfolio is 14%. The stock of low Fly Airline has a beta of3.00. The intrinsic value of the stock is ______.
Difficulty: Moderate

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