Homework Answers
Base-case valuation table:
Using this base-case table, by varying the required numbers, range of prices can be found, for the given sub-parts.
a). Lowest share price = $66.49 (at initial growth rate of 7%)
Highest share price = $72.94 (at initial growth rate of 11%)
b). Lowest share price = $64.12 (at initial revenue EBIT margin of 9%)
Highest share price = $78.44 (at initial revenue EBIT margin of 11%)
c). Lowest share price = $51.98 (at a WACC of 12%)
Highest share price = $78.79 (at a WACC of 9.50%)
d). Lowest share price = $58.24 (initial growth rate of 11%, initial EBIT margin of 11% and WACC of 12%)
Highest share price = $66.05 (initial growth rate of 7%, initial EBIT margin of 9% and WACC of 9.50%)
Note: Due to the answer word limit constraint, valuation tables for all scenarios have not been posted.
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