Damai Bhd’s expected earnings after taxes (EAT) is RM300 million. The current market price of its common stock is RM5.00 per share. At present the company has 500 million shares outstanding and a PE ratio of 10. i. Calculate the intrinsic value of Damai Bhd’s common stock. ii. Would you buy the share at its current price? Why?

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Damai Bhd’s expected earnings after taxes (EAT) is RM300 million. The current
market price of its common stock is RM5.00 per share. At present the company
has 500 million shares outstanding and a PE ratio of 10.
i. Calculate the intrinsic value of Damai Bhd’s common stock.
ii. Would you buy the share at its current price? Why?

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