1. What is the required rate of return for the common equity shareholders using CAPM? 2. Use the year-end 2020 data to compute the market-to-book ratio. 3. What is the implied value to book ratio?

Cornerstones of Financial Accounting
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ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
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Problem 88PSA: Ratio Analysis Consider the following information taken from the stockholders equity section: How do...
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1. What is the required rate of return for the common equity shareholders using CAPM?

2. Use the year-end 2020 data to compute the market-to-book ratio.

3. What is the implied value to book ratio?

National Company has the following information as of December 31, 2020:
No. of shares outstanding
Market capitalization
Price
Book value of common shareholder's equity
Current EPS - 2020
Forward EPS - 2021
Forward EPS - 2022
Earnings growth for 2023 to 2025
Dividend payout (of earnings)
Beta
Risk free rate
Market risk premium
Long run earnings growth for 2026 and beyond
850,000 shares
76,500,000
Php
Php
Php
Php
Php
Php
90 per share
25,450,000
10.00 per share
10.60 per share
11.236 per share
6%
30%
1.25
2.5%
7.0%
3.0%
Use 5 decimal places for the factors
Transcribed Image Text:National Company has the following information as of December 31, 2020: No. of shares outstanding Market capitalization Price Book value of common shareholder's equity Current EPS - 2020 Forward EPS - 2021 Forward EPS - 2022 Earnings growth for 2023 to 2025 Dividend payout (of earnings) Beta Risk free rate Market risk premium Long run earnings growth for 2026 and beyond 850,000 shares 76,500,000 Php Php Php Php Php Php 90 per share 25,450,000 10.00 per share 10.60 per share 11.236 per share 6% 30% 1.25 2.5% 7.0% 3.0% Use 5 decimal places for the factors
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