1.Industrial Light is expected to have earnings per share (EPS) of $5.00 per share in five years, a dividend per share of $2.50, a cost of equity of 12 percent, and a long-term expected growth rate of 5 percent. What is the terminal trailing price-to-earnings (P/E) ratio in five years?

A)   7.50.

B)   7.14.

C)   3.75.

D)   15.00.

2.A common price to earnings (P/E) based method for estimating terminal value in multi-stage models is the:

A)   fundamentals approach.

B)   dividend yield approach.

C)   P/E to growth (PEG) approach.

D)   earnings yield approach.

3.Precision Tools is expected to have earnings per share (EPS) of $5.00 per share in five years, a dividend per share of $2.00, a cost of equity of 12 percent, and a long-term expected growth rate of 5 percent. What is the terminal trailing price-to-earnings (P/E) ratio in five years?

A)   7.14.

B)   9.00.

C)   6.00.

D)   15.00.

答案和详解如下：

1.Industrial Light is expected to have earnings per share (EPS) of $5.00 per share in five years, a dividend per share of $2.50, a cost of equity of 12 percent, and a long-term expected growth rate of 5 percent. What is the terminal trailing price-to-earnings (P/E) ratio in five years?

A)   7.50.

B)   7.14.

C)   3.75.

D)   15.00.

The correct answer was A)

P₅/E₅ = (0.50 × 1.05) / (0.12 – 0.05) = 7.50

2.A common price to earnings (P/E) based method for estimating terminal value in multi-stage models is the:

A)   fundamentals approach.

B)   dividend yield approach.

C)   P/E to growth (PEG) approach.

D)   earnings yield approach.

The correct answer was A)

It is common to restate the Gordon growth model price as a multiple of expected future book value per share or earnings per share (EPS).

3.Precision Tools is expected to have earnings per share (EPS) of $5.00 per share in five years, a dividend per share of $2.00, a cost of equity of 12 percent, and a long-term expected growth rate of 5 percent. What is the terminal trailing price-to-earnings (P/E) ratio in five years?

A)   7.14.

B)   9.00.

C)   6.00.

D)   15.00.

The correct answer was C)

P₅/E₅ = (0.40 × 1.05) / (0.12 – 0.05) = 6.00