Year ending |
Dividends |
Repurchases |
Stock issues |
31-Dec-03 |
$620,250,000 |
$241,500,000 |
$840,000 |
31-Dec-04 |
730,500,000 |
309,000,000 |
1,117,500 |
31-Dec-05 |
852,750,000 |
564,000,000 |
1,687,500 |
31-Dec-06 |
978,750,000 |
3,697,500,000 |
2,017,500 |
31-Dec-07 |
1,109,250,000 |
575,000,000 |
1,657,500 |
31-Dec-08 |
1,293,000,000 |
729,750,000 |
2,902,500 |
31-Dec-09 |
1,535,250,000 |
1,127,500,000 |
3,855,000 |
31-Dec-10 |
1,785,750,000 |
1,303,500,000 |
2,925,000 |
31-Dec-11 |
2,059,500,000 |
887,250,000 |
2,332,500 |
31-Dec-12 |
2,438,250,000 |
500,000,000 |
12,000,500 |
31-Dec-13 |
2,844,750,000 |
1,287,750,000 |
5,220,000 |
The current stock price for this firm is $42.15 and they have 2,919,842,000 shares outstanding. Do the following to calculate the cost of equity for this firm:
Year ending | Dividends | Repurchases | Stock issues | total cash flow to equity |
31-Dec-03 | 620,250,000 | 241,500,000 | 840,000 | 860,910,000 |
31-Dec-04 | 730,500,000 | 309,000,000 | 1,117,500 | 1,038,382,500 |
31-Dec-05 | 852,750,000 | 564,000,000 | 1,687,500 | 1,415,062,500 |
31-Dec-06 | 978,750,000 | 3,697,500,000 | 2,017,500 | 4,674,232,500 |
31-Dec-07 | 1,109,250,000 | 575,000,000 | 1,657,500 | 1,682,592,500 |
31-Dec-08 | 1,293,000,000 | 729,750,000 | 2,902,500 | 2,019,847,500 |
31-Dec-09 | 1,535,250,000 | 1,127,500,000 | 3,855,000 | 2,658,895,000 |
31-Dec-10 | 1,785,750,000 | 1,303,500,000 | 2,925,000 | 3,086,325,000 |
31-Dec-11 | 2,059,500,000 | 887,250,000 | 2,332,500 | 2,944,417,500 |
31-Dec-12 | 2,438,250,000 | 500,000,000 | 12,000,500 | 2,926,249,500 |
31-Dec-13 | 2,844,750,000 | 1,287,750,000 | 5,220,000 | 4,127,280,000 |
Year ending | Dividends | % change YoY | Repurchases | % change YoY | Stock issues | % change YoY | total cash flow to equity | % change YoY |
31-Dec-03 | 620,250,000 | - | 241,500,000 | - | 840,000 | - | 860,910,000 | - |
31-Dec-04 | 730,500,000 | 17.78% | 309,000,000 | 27.95% | 1,117,500 | 33.04% | 1,038,382,500 | 20.61% |
31-Dec-05 | 852,750,000 | 16.74% | 564,000,000 | 82.52% | 1,687,500 | 51.01% | 1,415,062,500 | 36.28% |
31-Dec-06 | 978,750,000 | 14.78% | 3,697,500,000 | 555.59% | 2,017,500 | 19.56% | 4,674,232,500 | 230.32% |
31-Dec-07 | 1,109,250,000 | 13.33% | 575,000,000 | -84.45% | 1,657,500 | -17.84% | 1,682,592,500 | -64.00% |
31-Dec-08 | 1,293,000,000 | 16.57% | 729,750,000 | 26.91% | 2,902,500 | 75.11% | 2,019,847,500 | 20.04% |
31-Dec-09 | 1,535,250,000 | 18.74% | 1,127,500,000 | 54.50% | 3,855,000 | 32.82% | 2,658,895,000 | 31.64% |
31-Dec-10 | 1,785,750,000 | 16.32% | 1,303,500,000 | 15.61% | 2,925,000 | -24.12% | 3,086,325,000 | 16.08% |
31-Dec-11 | 2,059,500,000 | 15.33% | 887,250,000 | -31.93% | 2,332,500 | -20.26% | 2,944,417,500 | -4.60% |
31-Dec-12 | 2,438,250,000 | 18.39% | 500,000,000 | -43.65% | 12,000,500 | 414.49% | 2,926,249,500 | -0.62% |
31-Dec-13 | 2,844,750,000 | 16.67% | 1,287,750,000 | 157.55% | 5,220,000 | -56.50% | 4,127,280,000 | 41.04% |
Compound growth rate- 10 years | 18.44% | 20.44% | 22.51% | 19.02% | ||||
Compound growth rate- 5 years | 20.16% | 31.85% | 36.34% | 23.76% | ||||
Average growth rate- 10 years | 14.97% | 69.15% | 46.12% | 29.71% | ||||
Average growth rate- 5 years | 13.20% | 101.42% | 26.81% | 40.54% |
Gordon growth model | |
Stock price= D/(k-g) | |
k= D/stock price + g | |
Current stock price/ share | 42.15 |
No of shares outstanding | 2,919,842,000 |
Equity value | 123,071,340,300 |
Dividends | Repurchases | Stock issues | total cash flow to equity | |||||
Cost of equity | 21.18% | 21.70% | 22.51% | 23.02% |
Dividends | Growth in dividend is very steady. An 18% growth rate over the 10 years in pretty impressive. Since this rate is stable, it can be used to find the cost of equity as a reliable measure |
Repurchases | Repurchases fluctuate to a high level. This is in a way, cash flow to existing shareholders. However, this cant be used a reliable measure as it not steady and often -ve |
Stock issues | Stock issues fluctuate to a high level. This is in a way, -ve cash flow to existing shareholders if we assume they buy the additional reissue. However, this cant be used a reliable measure as it not steady and often -ve |
total cash flow to equity | This is the most comprehensive measure of total cash flow to the shareholders. There are fluctuations due to the changes in the components. However, it may be used as a measure of growth rate in Gordon model. |
Note- the scale of stock issues and other 3 cash flows is not the same. Hence, it is mapped separately
The table below shows the total dividends, share repurchases, and stock issues for a firm in...
The table below shows the total dividends, share repurchases, and stock issues for a firm in each year from 2003-2013 (copy and paste this table into Excel) Please use excel and show all work and the formulas used- thank you!! Year ending Dividends Repurchases Stock issues 31-Dec-03 $620,250,000 $241,500,000 $840,000 31-Dec-04 730,500,000 309,000,000 1,117,500 31-Dec-05 852,750,000 564,000,000 1,687,500 31-Dec-06 978,750,000 3,697,500,000 2,017,500 31-Dec-07 1,109,250,000 575,000,000 1,657,500 31-Dec-08 1,293,000,000 729,750,000 2,902,500 31-Dec-09 1,535,250,000 1,127,500,000 3,855,000 31-Dec-10 1,785,750,000 1,303,500,000 2,925,000 31-Dec-11 2,059,500,000...
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