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.

---

Definitions:

Assembly Line

An approach that puts fabricated parts together at a series of workstations; used in repetitive processes.

Process Times

The duration required to complete a specific process or operation in a production or service environment.

Theory Of Constraints

A management philosophy focusing on identifying and addressing the most critical limitations that hinder achieving a goal, aiming for continuous improvement.

Goldratt And Cox

They are the authors of "The Goal," a book introducing the Theory of Constraints, a methodology for identifying and managing constraints to improve performance.