PEG ratio is computed as:
ADividend yield divided by growth rate
BPB divided by expected earnings growth rate
CEV divided by expected EBITDA growth rate
DPE divided by expected earnings growth rate
Answer & Solution
Correct answer: D. PE divided by expected earnings growth rate
1. Identify what the question asks: this concept maps to pegratio (§5).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (D).
_Source: ICAI BoS CA Final Paper 2, Ch 13 "Business Valuation"_
Related questions
Adjusted present value (APV) approach values a firm by separating:DCF sensitivity to terminal-value assumption is highest when:Firm value if growth equals discount rate (g = k) in Gordon model:If the same firm's DCF value is Rs 600 crore and relative-valuation EV (peer multiples) isAn H-model values cash flows assuming linear decline in growth from high to stable. The moFree Cash Flow to Equity (FCFE) starting from FCFF: add after-tax interest, subtract net dMVA equals market value of firm minus invested capital. If market cap is Rs 1,200 crore, dEVA: NOPAT Rs 80 crore; invested capital Rs 500 crore; WACC 12%. EVA equals: