How to calculate a firm’s required rate of return with these info?
1. Risk Premium on the firm’s stock
2. Risk free rate
3. Earnings per share
4. Price per share of common stock
5. Book value of common stock equity
6. Total common stock outstanding
7. Common Stock dividend per share
8. Book value per share
9. P/E ratio
Please help
No market risk premium, no Beta
Easy
Usually, a Required Return on Stock (RR) on a stock can be shown as follows:
= Risk Free Rate (rf) + [ Market Risk Premium x Stock's Calculated Beta]
So what’s this strange Beta (B)? – its the risk component of the Stock.
How can we calculate it? use the following formula:
= The Risk Premium of the Stock divided by Market Risk Premium
I believe that’s all you need to calculate the firm’s ROR.
If you need to go further into corporate finance analysis, the P/E ratio does also gives a really good understanding of the company’s performance. But remember to compare it with some previous years (at least 5 years) in order to obtain a better understanding.
The P/E ratio indicated the price of one share of the corporation divided by the Annual Earnings Per Share.
Here the numerator is basically the market price of a SINGLE SHARE.
I hope this helps
|
|
Tables, Formed on a New and Easy Principle, for Calculating the Value of Stocks and Annuities; And for a Ready Dispatch of Business in the Public Fund £15.35 … |
|
|
Tables, formed on a new and easy principle, for calculating the value of stocks and annuities, and for a ready dispatch of business in the public funds … The second edition, improved … |
|
|
The Little Book of Value Investing (Unabridged) $13.09 The Little Book of Value Investing offers investors (professional and amateur alike) the necessary tools to follow a value-investment model that consistently beats the market…. |
|
|
The Little Book of Safe Money (Unabridged) $17.19 With the value of the dollar sinking, bond yields drying up, giant investment banks collapsing, and stock markets crumbling, how can you ensure that your money will stay safe…. |
|
|
Calculating God (Unabridged) $15.99 In this Hugo-nominated novel, an alien walks into a museum and asks if he can see a paleontologist…. |
|
|
Clark’s Big Book of Bargains $11.89 Find out how to spend the least, get the best value, and have fun doing it…. |
|
|
A Guide to the Redemption of the Land Tax $34.97 New – Subtitle: Containing an Analysis of the Several Acts Now in Force for the Redemption of the Land Tax: With Tables for Calculating the Terms of Redemption in Money and Stock Publisher: T.F.A. Day Publication date: 1853 Subjects: Land value taxation Business |
|
|
A Guide to the Redemption of the Land Tax $19.6 Used – Subtitle: Containing an Analysis of the Several Acts Now in Force for the Redemption of the Land Tax: With Tables for Calculating the Terms of Redemption in Money and Stock Publisher: T.F.A. Day Publication date: 1853 Subjects: Land value taxation Business |
|
|
A Guide to the Redemption of the Land Tax $47.95 New – Subtitle: Containing an Analysis of the Several Acts Now in Force for the Redemption of the Land Tax: With Tables for Calculating the Terms of Redemption in Money and Stock Publisher: T.F.A. Day Publication date: 1853 Subjects: Land value taxation Business |
|
|
A Guide to the Redemption of the Land Tax $40.58 Used – Subtitle: Containing an Analysis of the Several Acts Now in Force for the Redemption of the Land Tax: With Tables for Calculating the Terms of Redemption in Money and Stock Publisher: T.F.A. Day Publication date: 1853 Subjects: Land value taxation Business |
