The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

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Answer 1

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

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Suppose that in January 2006, Kenneth Cole Productions had EPS of $1.76 and a book value of equity of $12.93 per share. Use the multiples approach to estimate KCP's value based on the comparable firms given in the following table: a. Using the average P/E multiple from the table above, estimate KCP's share price. b. What range of share prices do you estimate based on the highest and lowest P/E multiples in the table above? c. Using the average price to book value multiple in the table above, estimate KCP's share price. d. What range of share prices do you estimate based on the highest and lowest price to book value multiples in the table above? a. Using the average P/E multiple from the table above, estimate KCP's share price. KCP's share price for this case will be $ (Round to the nearest cent.) b. What range of share prices do you estimate based on the highest and lowest P/E multiples in the table above? The highest price will be $ (Round to the nearest cent.) The lowest price will…

Suppose that in January 2006, Kenneth Cole Productions had EPS of $1.67 and a book value of equity of $8.83 per share, a price to book ratio of 2.84 and P/E ratio 15.01. Estimate KCP’s share price based on PE ratio. Estimate KCP’s share price based on price to book ratio.

(Market valur ratios) Garret Industries has a price/earnings ratio of 16.29X. a) If Garret's earnings per share are $1.35, what is the price per share of Garret,s stock? b) Using the price per share you found in part (a), determine the price/book ratio if Garret,s equity book value per share is $9.58.

Answer 2

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

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Answer 3

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Answer 6

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 7

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 8

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

Answer 9

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

Answer 10

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 11

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 12

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Answer 13

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Answer 14

Expert Solution & Answer

Answer 15

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Answer 16

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Answer 17

Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CC Ch. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CC Ch. 9.3 - Prob. 3CC Ch. 9.4 - Prob. 1CC Ch. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.

The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Solution Summary: The author explains the range of the share price based on the highest and lowest P/E multiples.

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Want to see the full answer?

Chapter 9 Solutions

The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Solution Summary: The author explains the range of the share price based on the highest and lowest P/E multiples.

To determine: The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

To determine: The range of the share price based on the highest and lowest P/E multiples. Introduction: P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Want to see the full answer?

Chapter 9 Solutions

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.