From the following information of Track Ltd. ascertain the current intrinsic value of share:- Recent EPS = $2.00 Growth rate (constant) = 5% Dividend Payout Ratio = 50% Required Rate of Return = 10% After five years the

From the following information of Track Ltd. ascertain the current intrinsic value of share:- Recent EPS = $2.00 Growth rate (constant) = 5% Dividend Payout Ratio = 50% Required Rate of Return = 10% After five years the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

From the following information of Track Ltd. ascertain the current intrinsic value of share:-

Recent EPS = $2.00

Growth rate (constant) = 5%

Dividend Payout Ratio = 50%

Required Rate of Return = 10%

After five years the P/E ratio is 10.5

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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