Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text: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 1.30, the risk-free rate is 2.55 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
$ 2.22
9.50%
$18.40
Share price
Earnings
$ 5.00
13.10
13.57%
Cash Flow
$ 6.50
9.51
11.32%
Sales
$25.65
2.45
7.17%
The sustainable growth rate is 5.282 percent, and the required return is 11.65 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.
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- 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.arrow_forwardProcter and Gamble (PG) paid an annual dividend of $2.79 in 2018. You expect PG to increase its dividends by 7.9% per year for the next five years (through 2023), and thereafter by 2.7% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.9% per year, use the dividend-discount model to estimate its value per share at the end of 2018.arrow_forwardBeagle 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 youarrow_forward
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