Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2019. Also assume that the firm’s equity beta is 1.20, the risk-free rate is 2.65 percent, and the market risk premium is 7.0 percent.           Dividends per share $ 2.26   Return on equity   9.50 % Book value per share $ 18.70

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter11: Investment Planning
Section: Chapter Questions
Problem 7FPE: Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for...
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Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2019. Also assume that the firm’s equity beta is 1.20, the risk-free rate is 2.65 percent, and the market risk premium is 7.0 percent.

 

       
Dividends per share $ 2.26  
Return on equity   9.50 %
Book value per share $ 18.70  
 

 

  Earnings Cash Flow Sales
2019 value per share $ 5.00   $ 6.30   $ 25.65  
Average price multiple   13.10     9.53     2.47  
Forecasted growth rate   13.59 %   11.30 %   7.23 %
 

 

 

Using the PE, P/CF, and P/S ratios, estimate the 2020 share price for Beagle Beauties.

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