What Is the Implied Growth Duration of Jones Industries Given

question 51

Multiple Choice

What is the implied growth duration of Jones Industries given the following: $\begin{array}{lcc}&\text { S\&P Industrials } & \text { Jones Industries } \\\text { P/E Ratios } & 12 & 15 \\\text { Average Growth (\%) } & 6.0 & 10.0 \\\text { Dividend Yield } & .05 & .03\end{array}$

• A)7.2 years
• B)10.9 years
• C)12.5 years
• D)13.9 years
• E)15.2 years

---

Definitions:

Fair Value

An estimated market value of an asset or liability, based on the assumption of a transaction between willing parties in an arm's length transaction.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing factors such as reputation, brand, and customer relationships.

Entity Method

A consolidation approach where investments are recorded at the purchase cost, adjusted for the parent company's share in the subsidiary's post-acquisition profits or losses.

Gross Margin

A company's revenue minus its cost of goods sold, divided by revenue, expressed as a percentage, indicating the percentage of revenue that exceeds the cost of goods sold.