Beagle Beauties engages in the development, manufacture, and sale ofa line of cosmetics designed to make your dog look glamorous. Belowyou will find selected information necessary to compute some valuationestimates for the firm. Assume the values provided are from year-end2021. Also assume that the firm's equity beta is 1.50, the risk-free rate is2.70 percent, and the market risk premium is 7.0 percent.Dividends per shareReturn on equityBook value per share2021 value per shareAverage price multipleForecasted growth rate$ 2.289.50%$ 18.85Earnings Cash Flow$ 5.0013.10Sales$ 6.30$ 25.659.542.4813.60%11.29%7.37%The sustainable growth rate is 5.168 percent, and the required return is13.20 percent. Use the clean surplus relationship to calculate the shareprice for Beagle Beauties with the residual income model.Note: Do not round intermediate calculations. Round your answer to2 decimal places.Share price

The residual income model is a method used to estimate the intrinsic value of a stock by considering…

Answered: Beagle Beauties engages in the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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As a junior investment manager, your boss instructs you to help a client to invest $100,000for the next year. Particularly, you are asked to form an investment portfolio for the clientby investing in risk-free assets like 90-day bank bill and two stocks: A and B. Stock A hasa beta value of 0.8, an expected return of 7% and a standard deviation of 10%; and stockB has a beta value of 1.2, an expected return of 12% and a standard deviation of 15%.The correlation coefficient between the returns for the two stocks is 0. The risk-free rate is2%.(a) What is the expected return of the risky portfolio with the two stocks that has theleast amount of risk?(b) Suppose that the optimal risky portfolio with the two stocks has a weight of 53% inA and 47% in B, and has the expected return of 9.4% and standard deviation of8.8%. If this client is willing to take a risk measured by standard deviation of 5% forhis overall investment portfolio, how much would you recommend to the client toinvest in the…
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2019. Also assume that the firm’s equity beta is 1.20, the risk-free rate is 2.65 percent, and the market risk premium is 7.0 percent. Dividends per share $ 2.26 Return on equity 9.50 % Book value per share $ 18.70 Earnings Cash Flow Sales 2019 value per share $ 5.00 $ 6.30 $ 25.65 Average price multiple 13.10 9.53 2.47 Forecasted growth rate 13.59 % 11.30 % 7.23 % Using the PE, P/CF, and P/S ratios, estimate the 2020 share price for Beagle Beauties.
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2021. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.35 percent, and the market risk premium is 6.0 percent. Dividends per share Return on equity Book value per share 2021 value per share Average price multiple Forecasted growth rate $2.34 8.50% $ 19.30 Share price Earnings Cash Flow $5.00 13.10 13.63% $6.30 9.57 11.26% Sales $ 25.65 2.51 7.24% The sustainable growth rate is 4.522 percent, and the required return is 10.75 percent. Use the clean surplus relationship to calculate the share price for Beagle Beauties with the residual income model. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year - end 2021. Also assume that the firm's equity beta is 1.40, the risk - free rate is 2.60 percent, and the market risk premium is 8.0 percent. Dividends per share $ 2.44 Return on equity 10.50% Book value per share $ 20.05 Earnings Cash Flow Sales 2021 value per share $ 5.00 $ 6.40 $ 25.65 Average price multiple 13.10 9.62 2.56 Forecasted growth rate 13.68% 11.21% 7.39% Using the PE, P/CF, and P/S ratios, estimate the 2022 share price for Beagle Beauties. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. DO NOT USE EXCEL please leave a key for the formula thank you
A firm has a net return on equity of 10% over the fiscal year 2019-2020. Over the same year its three closest rivals have returns of 16%, 14% and 9% respectively. Its opportunity cost of capital is equal to: 13 10 16 14
Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2.00, a dividend in year 2 of $3.00, and a dividend in year 3 of $4.00. After year 3, dividends are expected to grow at the rate of 4% per year. An appropriate required return for the stock is 13%. Using the multistage DDM, the stock should be worth_______
Formulate a system of equations for the situation below and solve. A private investment club has $600,000 earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three categories: high-risk, medium-risk, and low-risk. Management estimates that high-risk stocks will have a rate of return of 15% / year; medium-risk stocks, 10%/year; and low-risk stocks, 7%/year. The members have decided that the investment in low-risk stocks should be equal to the sum of the investments in the stocks of the other two categories. Determine how much the club should invest in each type of stock if the investment goal is to have a return of $60,000/year on the total investment. (Assume that all the money available for investment is invested.) high-risk stocks $ 24000 X medium-risk stocks low-risk stocks LA LA
Zipliners R Us is a fairly new business with a market price of $30 and Rose Gardens anticipates that their dividends will grow at a rate of 3% for the foreseeable future. The next dividend is expected to be $1.50. Calculate the value of the securities, recommend to Rose Gardens if the investment will make the sense if they have $50,000 to invest and the expected rate of return for all securities mentioned above is 7%
Polydamic Group Berhad is the largest environmental services facility in northern Malaysia. Polygamy has grown to be the environmental service provider with the largest fabrication facility and the largest workforce in northern Malaysia. It has a current dividend of RM1.50. The dividend is expected to grow at 6 percent annually. The company’s beta is 1.1. The risk-free interest rate is 4 percent and the market risk premium is 6.0 percent. Jacky Tan is interested to buy a stock of Polydamic. He seeks your assistance to: Show all your working steps. Calculate next year’s projected dividend of Polydamic’s stock. Compute Polydamic’s required rate of return for Jacky Tan. Calculate the value of Polydamic stock. If Polydamic has a share of preferred stock that the par value is RM10 per share, the preferred dividend rate is 8 percent and the required return is 10 percent, compute the price of the preferred stock for Jacky Tan.
What is the answer ?
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2021. Also assume that the firm's equity beta is 1.20, the risk-free rate is 2.65 percent, and the market risk premium is 7.0 percent. Dividends per share Return on equity Book value per share 2021 value per share Average price multiple Forecasted growth rate $ 2.26 9.50% $ 18.70 Earnings $ 5.00 Cash Flow Sales $ 6.30 $ 25.65 13.10 9.53 2.47 13.59% 11.30% 7.23% Using the PE, P/CF, and P/S ratios, estimate the 2022 share price for Beagle Beauties. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Using PE ratio Using P/CF ratio Using P/S ratio Share Price

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