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    Creative Toys recently paid a dividend and has a payout ratio of 67% and ROE of 23% with expected future earnings and dividend growth of 7.6%. Given shareholders require a 14% return, the justified price to book value multiple is closest to the given value. Consumer Products has a trailing P/E lower than its peer group median, so it is undervalued. Party Favors has a leading P/E and growth rate, and its PEG ratio of 0.82 is below the peer group median of 0.92, so it is undervalued.

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    Creative Toys recently paid a dividend and has a payout ratio of 67% and ROE of 23% with expected future earnings and dividend growth of 7.6%. Given shareholders require a 14% return, the justified price to book value multiple is closest to the given value. Consumer Products has a trailing P/E lower than its peer group median, so it is undervalued. Party Favors has a leading P/E and growth rate, and its PEG ratio of 0.82 is below the peer group median of 0.92, so it is undervalued.

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    282 views4 pages

    1

    Uploaded by

    bando007
    Creative Toys recently paid a dividend and has a payout ratio of 67% and ROE of 23% with expected future earnings and dividend growth of 7.6%. Given shareholders require a 14% return, the justified price to book value multiple is closest to the given value. Consumer Products has a trailing P/E lower than its peer group median, so it is undervalued. Party Favors has a leading P/E and growth rate, and its PEG ratio of 0.82 is below the peer group median of 0.92, so it is undervalued.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 4

    • Creative Toys recently paid a dividend of $1.35 a share.

    It has a
    payout ratio of 67%, a ROE of 23%, and an expected growth rate in
    earnings and dividends for the foreseeable future of 7.6%.
    Shareholders require a return of 14% on their investment. The
    justified price to book value multiple is closest to:
    • Consumer Products, Inc. has a trailing P/E of 27.52, while the median
    peer group P/E is 33.25. Assuming that there are no differences in the
    fundamentals among the peer firms and Consumer Products, the firm
    is:
    • A. correctly valued.
    • B. overvalued.
    • C. undervalued.
    • Party Favors, Inc. has a leading P/E of 18.75 and a 5-year consensus
    growth rate forecast of 15.32%. The median PEG, based on leading
    P/E, for a group of companies comparable in risk to Party Favors, Inc.
    is 0.92. The stock appears to be:
    • A. overvalued because its PEG ratio is 0.82.
    • B. overvalued because its PEG ratio is 1.22.
    • C. undervalued because its PEG ratio is 0.82.

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