1. The market capitalization rate on the stock of Aberdeen Wholesale Company is 10%. Its expected ROE is 12%, and its expected EPS is $5. If the firm's plowback ratio is 50%, what’s the firm’s intrinsic value per share?
2. Tom Clothing is a national chain of men's clothing stores. It is planning to come out with a new men's suit with a retail price of $200 for each suit. Tom's will have a variable cost of $25 per suit and a total fixed cost of $100,000 to develop the suit. A. How many suits will Tom have to sell to breakeven? B. How many suits must Tom sell to make a $50,000 profit? C. If Tom changes the retail price to $220 per suit, how many suits must Tom sell to make a $50,000 profit? Show your work on each question.