Estimated Value of a Stock: Earnings Multiplier Model

Estimating the Value of a Stock Using the Earnings Multiplier Model

Prev Question Next Question

Question

Given that the expected dividend payout ratio on a common stock is 0.77, the required rate of return is 23%, the dividend growth rate is 18%, using the earnings multiplier model, what is the estimated value of the stock?

Answers

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

Explanation

In order to estimate the value of the stock using the earnings multiplier model, one will eventually have to multiply the P/E ratio by next year's earnings (E). The P/

E ratio can be determined with the information presented in this problem, but E cannot be.

Prev Question Next Question