Use the Following Information to Answer the Requirements Required:
A

question 28

Essay

Use the following information to answer the requirements:
$\begin{array}{|c|r|r} & \text { Company X } & \text { Company Y } \\\hline \text { Reported EPS } & \$ 15.00 & \$ 15.00 \\\hline \text { EPS decomposed: } & & \\\hline \text { Permanent } & 75 \% & 65 \% \\\hline \text { Transitory } & 20 \% & 25 \% \\\hline \text { Value-irrelevant } & 5 \% & 10 \%\end{array}$

Required:
a.Use a risk-adjusted cost of capital of 15% to calculate each firm's implied share price and earning multiples.What are the implicit share prices and earnings multiples for the two firms different?
b.Repeat requirement a.,but use a risk-adjusted cost of capital of 8% instead.

---

Definitions:

Multinational Corporation

A company that operates in multiple countries, managing production or delivering services in more than one country beyond its home country.

International Operations

Business activities that are conducted across national borders.

Foreign Country

A nation or territory outside one's own country, subject to a different legal and cultural system.

Parasitoid Wasps

Insects that lay their eggs in or on the bodies of other insects; the larvae then feed on the host, typically leading to its death.