Consider the following data for Company X and its industry.
Company X
Next Year's Annual Earnings = 20
WACC = 12%
g = 5% (over next 5 years)
Industry
P/E = 15
Determine the company's value according to the following methods.
a. Determine the value relative to the industry.
b. Determine the instrinsic value assuming a 5% growth rate for infinity.