At year end, National Corporation balance sheet showed total assets of P70,000,000, total liabilities of P35,000,000, total preferred share capital of P10,000,000, and 1,000,000 shares of common stock outstanding. Next year, National Corporation is projecting that it will have net income available for the common shareholders of P1,550,000. If the average PE multiple in National Corporation’s industry is 12, what should be the price of its’ stock?

At year end, National Corporation balance sheet showed total assets of P70,000,000, total liabilities of P35,000,000, total preferred share capital of P10,000,000, and 1,000,000 shares of common stock outstanding. Next year, National Corporation is projecting that it will have net income available for the common shareholders of P1,550,000. If the average PE multiple in National Corporation’s industry is 12, what should be the price of its’ stock?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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