a-1). Payout Ratio = Dividend / Earnings = $4.32 / $6.90 = 0.6261, or 62.61%
Sustainable Growth Rate = ROE * (1 - Payout Ratio) = 17% * (1 - 0.6261) = 6.36%
a-2). According to the CAPM,
Required Return = Risk-free Rate + [Beta * Market Risk Premium]
= 2.95% + [1.40 * 7.9%] = 2.95% + 11.06% = 14.01%
b). Share Price(2015) = [D(2015) * (1 + g)] / (r - g)
= [$4.32 * (1 + 0.0636)] / [0.1401 - 0.0636] = $4.59 / 0.0765 = $60.03
Savod Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.95 percent, and the market risk premium is 7.9 percent. Dividends per share Return on equity Book value per share $ 4.32 17.00%...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.00 percent, and the market risk premium is 6 percent. Dividends per share Return on equity Book value per share $ 2.16 8.00%...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm’s equity beta is 1.40, the risk-free rate is 2.75 percent, and the market risk premium is 7 percent. a. What are the sustainable growth rate and required return for Beagle Beauties?...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm’s equity beta is 1.40, the risk-free rate is 2.40 percent, and the market risk premium is 6.8 percent. Dividends per share $ 3.12 Return on equity 12.00 % Book value per...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2019. Also assume that the firm’s equity beta is 1.50, the risk-free rate is 2.70 percent, and the market risk premium is 7.0 percent. Dividends per share $ 2.28 Return on equity 9.50 % Book value per...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm’s equity beta is 1.40, the risk-free rate is 3.00 percent, and the market risk premium is 8.0 percent. Dividends per share $ 4.44 equity Book value per share 17.50% Return on...
Problem 6-27 Constant Perpetual Growth Model (LO1, CFA6) Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.90 percent, and the market risk premium is 7.8 percent. Dividends per share Return on...
Problem 6-29 Residual Income Model (LO3, CFA9) Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2015. Also assume that the firm's equity beta is 1.40, the risk-free rate is 2.55 percent, and the market risk premium is 7.2 percent. Dividends per share Return on equity...
problem 29 on estimates for the firm. Assume the values provided are from year Assume the values provided are from year-end 2015. Also assume that the tim's equity betais 1.40 the rise free rate is 2.75 percent, and the Noent free rate is 2.75 percent, and the market risk premium is Dividends per share Return on equity Book value per share $ 2.04 9,50% $17.05 Cash Flow Sales 2015 value per share Average price multiple Forecasted growth rate Earnings $5.00...
Beagle Beauties engages in the development, manufacture, and sale of a line of cosmetics designed to make your dog look glamorous. Below you will find selected information necessary to compute some valuation estimates for the firm. Assume the values provided are from year-end 2019. Also assume that the firm’s equity beta is 1.50, the risk-free rate is 2.70 percent, and the market risk premium is 7.0 percent.Dividends per share$2.28Return on equity9.50%Book value per share$18.85 EarningsCash FlowSales2019 value per share$5.00$6.30$25.65Average price multiple13.109.542.48Forecasted...