High Tech Chip Company Is Expected to Have EPS in the Coming

question 98

Multiple Choice

High Tech Chip Company is expected to have EPS in the coming year of $2.50.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
• E) none of these

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