What is the net book value per share of the asset


Question: A firm that pays out 65% of its earnings as dividends has an accounting rate of return of 20%. Its P/E ratio is 10 and its earnings per share is 108 cents.

i. What is the price per share?

ii. What is the dividend yield?

iii. If shares were bought, what would be the payback period? Assume the only return is the dividend.

iv. What is the net book value per share of the asset investment of the company?

v. If the risk-adjusted required rate of return is 6%, what would be the NPV per share for buying shares?

vi. Would you buy shares using AROR or NPV?

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Finance Basics: What is the net book value per share of the asset
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