An analyst just received the following information for Mythical Interactions, Inc. A senior equity trader in her group wants to know if he should purchase a large block of the stock.·Earnings retention rate at 65%·Required rate of return, ke, of 11%·Return on equity (ROE) of 13%, expected to remain constant·Estimated Sales per share of $175·Estimated EBIDTA profit margin of 22%·Estimated Depreciation per share of $20·Estimated Interest Expense per share of $12 Corporate Tax Rate of 40%·Current market price is $45.50 per shareBased on the assumptions above, which of the following recommendations is correct?The analyst should advise the trader to: —

单选题 编号：2690954

1. An analyst just received the following information for Mythical Interactions, Inc. A senior equity trader in her group wants to know if he should purchase a large block of the stock.
·Earnings retention rate at 65%
·Required rate of return, ke, of 11%
·Return on equity (ROE) of 13%, expected to remain constant
·Estimated Sales per share of $175
·Estimated EBIDTA profit margin of 22%
·Estimated Depreciation per share of $20
·Estimated Interest Expense per share of $12 Corporate Tax Rate of 40%
·Current market price is $45.50 per share
Based on the assumptions above, which of the following recommendations is correct?
The analyst should advise the trader to:

A.Purchase the stock.It is undervalued by approximately $10.20.
B.Not purchase the stock.It is overvalued by approximately $8.00.
C.Purchase the stock.It is undervalued by approximately $8.00.

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