Hi sir,
I have doubt in part b) to get price earning. I see answer I understand current price earning 7.7 times. But in average growth return (32.4/27.7)*0.25-1. In this part I don’t understand from where 0.25 came?? And other two parts which is earning per share following expansion and share price predicted that part I m not able to get it. Can you please explain me.thanks in advance.
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Dartig co (Dec 2008)
Sir I understood growth rate 4% but now other parts not able to understand
5y ago#2It is not (32.4/27.7)*0.25-1, it is (32.4/27.7)^0.25 - 1
You should remember from school that writing something to the power of 0.25 (i.e. 1/4) is the same as writing the fourth root of (32.4/27.7). It is the fourth root because there are 4 years of growth.
I assume that this is what caused you a problem with the other two parts and that you are now OK with them, but if not then ask again.
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