11．

Note: CVR, Inc., has a book value of equity of $80 and a required rate of return of 10%. Home, Inc., has a book value of equity of $100 and a required rate of return of 11%.

If Home, Inc., has a required return for shareholders of 11 percent, what is its appropriate leading price-to-sales (P_o/S₁) multiple if the firm undertakes the low margin/high volume strategy?

A)   0.80.

B)   1.00.

C)   0.20.

D)   1.80.

12．

Note: CVR, Inc., has a book value of equity of $80 and a required rate of return of 10%. Home, Inc., has a book value of equity of $100 and a required rate of return of 11%.

If CVR, Inc., has a required return for shareholders of 10 percent, what is its appropriate leading price-to-sales (P/S) multiple if the firm undertakes the high margin/low volume strategy?

A)   0.20.

B)   1.00.

C)   1.46.

D)   0.80.

13．An analyst has gathered the following data about the Garber Company:

§ Payout Ratio = 60%

§ Expected Return on Equity = 16.75%

§ Required rate of return = 12.5%

What will be the appropriate price-to-book value (PBV) ratio for the Garber Company based on return differential?

A)   0.58.

B)   1.38.

C)   1.73.

D)   1.85.

14．The following data was available for Morris, Inc., for the year ending December 31, 2001:

§ Sales per share =  $150

§ Earnings per share = $1.75

§ Return on Equity = 16%

§ Required rate of return = 12%

If the expected growth rate in dividends and earning is 4 percent, what will the appropriate price/sales (P/S) multiple be for Morris?

A)   0.037.

B)   0.073.

C)   0.114.

D)   0.109.

15．The Farmer Co. has a payout ratio of 70 percent and a return on equity (ROE) of 14 percent. What will be the appropriate price-to-book value (PBV) based on fundamentals if the expected growth rate in dividends is 4.2 percent and the required rate of return is 11 percent?

A)   0.64.

B)   1.50.

C)   2.15.

D)   1.44.

答案和详解如下：

11．

Margin and Sales Trade-off for CVR, Inc. and Home, Inc., for Next Year
Firm	Strategy	Retention Rate	Profit Margin	Sales/Book Value of Equity
CVR, Inc.	High Margin / Low Volume	20%	8%	1.25
CVR, Inc.	Low Margin / High Volume	20%	2%	4.00
Home, Inc.	High Margin / Low Volume	40%	9%	2.00
Home, Inc.	Low Margin / High Volume	40%	1%	20.0

Note: CVR, Inc., has a book value of equity of $80 and a required rate of return of 10%. Home, Inc., has a book value of equity of $100 and a required rate of return of 11%.

If Home, Inc., has a required return for shareholders of 11 percent, what is its appropriate leading price-to-sales (P_o/S₁) multiple if the firm undertakes the low margin/high volume strategy?

A)   0.80.

B)   1.00.

C)   0.20.

D)   1.80.

The correct answer was C)

g = Retention Rate x Profit Margin x Sales/BV of equity = 0.40 x 0.01 x 20.0 = 0.08.

If profit margin is based on the expected earnings next period,

P/S = (profit margin x payout ratio)/(r-g) = (0.01x0.60)/(0.11-0.08) = 0.20.

12．

Margin and Sales Trade-off for CVR, Inc. and Home, Inc., for Next Year
Firm	Strategy	Retention Rate	Profit Margin	Sales/Book Value of Equity
CVR, Inc.	High Margin / Low Volume	20%	8%	1.25
CVR, Inc.	Low Margin / High Volume	20%	2%	4.00
Home, Inc.	High Margin / Low Volume	40%	9%	2.00
Home, Inc.	Low Margin / High Volume	40%	1%	20.0

Note: CVR, Inc., has a book value of equity of $80 and a required rate of return of 10%. Home, Inc., has a book value of equity of $100 and a required rate of return of 11%.

If CVR, Inc., has a required return for shareholders of 10 percent, what is its appropriate leading price-to-sales (P/S) multiple if the firm undertakes the high margin/low volume strategy?

A)   0.20.

B)   1.00.

C)   1.46.

D)   0.80.

The correct answer was D)

g = Retention Rate x Profit Margin x Sales/BV of equity = 0.20 x 0.08 x 1.25 = 0.02.

If profit margin is based on the expected earnings next period,

Leading P/S = (profit margin x payout ratio) /(r-g) = (0.08x0.80)/(0.10-0.02) = 0.80.

13．An analyst has gathered the following data about the Garber Company:

§ Payout Ratio = 60%

§ Expected Return on Equity = 16.75%

§ Required rate of return = 12.5%

What will be the appropriate price-to-book value (PBV) ratio for the Garber Company based on return differential?

A)   0.58.

B)   1.38.

C)   1.73.

D)   1.85.

The correct answer was C)

The estimated growth rate is 6.7% [0.1675 * (1 - 0.60)] and PBV ratio based on rate differential will be:

P₀/BV₀ = (ROE₁ - g) / (r - g) = (0.1675 - 0.067) / (0.125 - 0.067) = 1.73.

14．The following data was available for Morris, Inc., for the year ending December 31, 2001:

§ Sales per share =  $150

§ Earnings per share = $1.75

§ Return on Equity = 16%

§ Required rate of return = 12%

If the expected growth rate in dividends and earning is 4 percent, what will the appropriate price/sales (P/S) multiple be for Morris?

A)   0.037.

B)   0.073.

C)   0.114.

D)   0.109.

The correct answer was C)

Profit Margin = EPS / Sales per share = 1.75 / 150 = 0.01167 or 1.167%.

Payout ratio = 1 - (g / ROE) = 1 - (0.04 / 0.16) = 0.75 or 75%.

P₀ / S₀ = [profit margin * payout ratio * (1 + g)] / (r - g) = [0.01167 * 0.75 * 1.04] / (0.12 - .04) = 0.11375.

15．The Farmer Co. has a payout ratio of 70 percent and a return on equity (ROE) of 14 percent. What will be the appropriate price-to-book value (PBV) based on fundamentals if the expected growth rate in dividends is 4.2 percent and the required rate of return is 11 percent?

A)   0.64.

B)   1.50.

C)   2.15.

D)   1.44.

The correct answer was D)

Based on fundamentals:

P/BV = (0.14 -  0.042) / (0.11 - 0.042) = 1.44.