Reading 60: An Introduction to Security Valuation: Part II 办公楼, 建筑, 河南省, style

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6．firm has a profit margin of 10 percent, an asset turnover of 1.2, an equity multiplier of 1.3, and an earnings retention ratio of 0.5. What is the firm's internal growth rate?

A)   4.5%.

B)   5.7%.

C)   6.7%.

D)   7.8%.

 

7．high growth rate would be consistent with:

A)   a low retention rate.

B)   a high dividend payout rate.

C)   a high ROE.

D)   a low ROE.

 

8．at is the implied dividend growth rate for a firm with a return on equity (ROE) of 15%, a dividend payout ratio of 40%, and an investor discount rate of 11%?

A)   4%.

B)   6%.

C)   9%.

D)   12%.

 

9．e Sustainable Growth Rate is equal to:

A)   (ROE) x (1-RR).

B)   (1-ROE) x (RR).

C)   (ROE) x (RR).

D)   (ROE) x (1+RR).

 

10．irm has a return on equity (ROE) of 15% and a dividend payout rate of 80%. If last year's dividend was $0.80 and the required return on equity is 10%, what is the firm's estimated dividend growth rate and what is the current stock price?

Dividend growth rate

Stock price

 

A)                              12.00%     $11.77

B)                              3.00%       $9.96

C)                              3.00%       $11.77

D)                              12.00%     $9.96

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答案和详解如下：

6．firm has a profit margin of 10 percent, an asset turnover of 1.2, an equity multiplier of 1.3, and an earnings retention ratio of 0.5. What is the firm's internal growth rate?

A)   4.5%.

B)   5.7%.

C)   6.7%.

D)   7.8%.

The correct answer was D)

ROE = (EAT/Sales)(Sales/Total Assets)(Total Assets)

ROE = (.1)(1.2)(1.3) = .156

g = (retention ratio)(ROE) = .5(.156) = .078 or 7.8%

 

7．high growth rate would be consistent with:

A)   a low retention rate.

B)   a high dividend payout rate.

C)   a high ROE.

D)   a low ROE.

The correct answer was C)

Since g = retention rate * ROE, or (1 - payout ratio) * ROE, the only choice that would result in a higher g is a higher ROE. A low ROE, or a high dividend payout rate (which is the same as a low retention rate) would result in a low growth rate.

 

8．at is the implied dividend growth rate for a firm with a return on equity (ROE) of 15%, a dividend payout ratio of 40%, and an investor discount rate of 11%?

A)   4%.

B)   6%.

C)   9%.

D)   12%.

The correct answer was C)

g = (ROE)(retention rate)

The retention rate = 1 - dividend payout rate = (1 - .4) = .6

g = (.15)(.6) = .09

 

9．e Sustainable Growth Rate is equal to:

A)   (ROE) x (1-RR).

B)   (1-ROE) x (RR).

C)   (ROE) x (RR).

D)   (ROE) x (1+RR).

The correct answer was C)

The Sustainable Growth Rate is equal to the return on the equity portion of new investments (ROE) multiplied by the firm's retention rate (RR).

 

10．irm has a return on equity (ROE) of 15% and a dividend payout rate of 80%. If last year's dividend was $0.80 and the required return on equity is 10%, what is the firm's estimated dividend growth rate and what is the current stock price?

Dividend growth rate

Stock price

 

A)                              12.00%     $11.77

B)                              3.00%       $9.96

C)                              3.00%       $11.77

D)                              12.00%     $9.96

The correct answer was C)

The expected growth rate of dividends is the retention rate (RR) times the return on the equity portion of new investments (ROE), g = (RR)(ROE). The retention rate is 1 minus the payout rate. RR = (1 - 0.80) = 0.20. g = (0.20)(0.15)= 3.00%.

The value of the stock will be the dividend paid next year divided by the required rate of return minus the growth rate.  Next year's dividend is $0.80 × 1.03 = $0.824.  So the value is 0.824 / (.10 - 0.03) = 0.824 / 0.07 =  $11.77