Low Tech Chip Company Is Expected to Have EPS of $2.50

question 90

Multiple Choice

Low Tech Chip Company is expected to have EPS of $2.50 in the coming year. The expected ROE is 14%. An appropriate required return on the stock is 11%. If the firm has a dividend payout ratio of 40%, the intrinsic value of the stock should be

• A) $22.73.
• B) $27.50.
• C) $28.57.
• D) $38.46.

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