1. On a particular date, FedEx has a stock price of $88.66 and an EPS of $6.34. Its competitor, UPS, had an EPS of $0.40. What would be the expected price of UPS stock on this date, if estimated using...

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1. On a particular date, FedEx has a stock price of $88.66 and an EPS of $6.34. Its competitor, UPS, had an EPS of $0.40. What would be the expected price of UPS stock on this date, if estimated using the method of comparables?

options: A) $5.59 B) $8.39 C) $10.49 D) $13.98

2. Suppose that a stock gave a realized return of 20% per year over a two-year time period and a 10% return over the third year. The geometric average annual return is:

options: A) 9.70% B) 11.20% C) 14.96% D) 16.55%

3.Conundrum Mining is expected to generate $12 million, $18 million, $22 million and $26 million in free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 million shares outstanding, what is Conundrum's expected current share price?

options: A)$10.84 B)$13.72 C)$16.16 D)$16.2



Answered Same DayDec 24, 2021

Answer To: 1. On a particular date, FedEx has a stock price of $88.66 and an EPS of $6.34. Its competitor, UPS,...

David answered on Dec 24 2021
124 Votes
1. On a particular date, FedEx has a stock price of $88.66 and an EPS of $6.34. Its competitor, UPS, had
an EPS of $0.40. What would be the expected price of UPS stock on this date, if estimated using the
method of comparables?
options: A) $5.59 B) $8.39 C) $10.49 D) $13.98
Solution:
FedEx stock price (P) = 88.66
FedEx EPS (E) = 6.34
FedEx P/E = 13.98
UPS EPS (E) = 0.40
Based on comparabale method, we will apply FedEx P/E ratio to UPS EPS and get the stock price as
13.98*0.4 = $5.59 (Option A).
2. Suppose that a stock gave a realized return of 20% per year over a two-year time period and a 10%
return over the...
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