help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / We want to compute the EPS and price of Pabon

We want to compute the EPS and price of Pabon

Finance

We want to compute the EPS and price of Pabon. It has 2 m shares outstanding and $80 of book value of equity. Pabon expects to sell $20m worth of sales and have EAT of $5m and keep 40% of its profit. Furthermore, it has $100m of assets. Its coe is .12 and its bheta is 1.2. Calculate Pabon's price and EPS. 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Computation of EPS:

EPS = Earning after Tax / Number of Shares Outstanding

Here,

Earning after Tax = $5,000,000

Number of Shares Outstanding = 2,000,000 shares 

 

EPS = $5,000,000/2,000,000 = $2.50 per share

 

Computation of Price of Pabon:

Cost of Equity = Earning Per Share/Market Price per Share

0.12 = $2.50/Market Price per Share

Market Price per Share = $2.50/0.12 = $20.83

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)