Homework Answers
| Dividend Projection | |||
| Year | Dividend Growth Rate | Dividend per Share | |
| 2014 | 0.86 | ||
| 2015 | 3 | 0.89 | |
| 2016 | 3 | 0.91 | |
| 2017 | 3 | 0.94 | |
| 2018 | 5 | 0.99 | |
| 2019 | 5 | 1.04 | |
| 2020 | 5 | 1.09 | |
| 2021 | 5 | 1.14 | |
| 2022 | 5 | 1.2 | |
| 2023 | 5 | 1.26 | |
| 2024 | 7 | 1.35 | |
| Dividend per share = Previous year dividend x (1 + Dividend growth rate) | |||
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2. Perform a dividend discount model valuation. Assumptions: Stage 1 (2014-2016): During this period, SCB is...
A) Using the multi-stage dividend discount model (DDM), calculate the value of FLT shares. Use scrap...
A) Using the multi-stage dividend discount model (DDM),
calculate the value of FLT shares. Use scrap paper for your
workings (15 MARKS).
Assume that dividends in the next three years (starting from
year 2017) will grow at a rate of 13% annually. Further, it is
assumed that dividends will grow at a rate of 11% for the next four
years (year 4 to 7). Thereafter it is assumed that the company will
grow at a constant growth rate of 7%...
Basic Stock Valuation: Free Cash Flow Valuation Model The recognition that dividends are dependent on earnings,...
Basic Stock Valuation: Free Cash Flow Valuation Model The recognition that dividends are dependent on earnings, so a reliable dividend forecast is based on an underlying forecast of the firm's future sales, costs and capital requirements, has led to an alternative stock valuation approach, known as the free cash flow valuation model. The market value of a firm is equal to the present value of its expected future free cash flows: Market value of company FCF (1+WACC) + FCF (1+WACC)...
2. a) It is 1 July 2022. Martins plc has gone through a period of retrenchment which has meant that for the last si...
2. a) It is 1 July 2022. Martins plc has gone through a period of retrenchment which has meant that for the last six years dividends have been held constant at 5p per share per annum. A dividend of 5p per share has been paid on the 30 June 2022. The market expects the annual dividends to remain at this level for the next three years (the next dividend is due in one year's time) and then to increase at...
ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.'s 2016 financial statements are shown here. Morrissey Technologies Inc.: Balance...
ADDITIONAL FUNDS NEEDED Morrissey Technologies Inc.'s 2016 financial statements are shown here. Morrissey Technologies Inc.: Balance Sheet as of December 31, 2016 Cash $180,000 Accounts payable $360,000 Receivables 360,000 Notes payable 56,000 Inventories 720,000 Accrued liabilities 180,000 Total current assets $1,260,000 Total current liabilities $596,000 Long-term debt 100,000 Fixed assets 1,440,000 Common stock 1,800,000 Retained earnings 204,000 Total assets $2,700,000 Total liabilities and equity $2,700,000 Morrissey Technologies Inc.: Income Statement for December 31, 2016 Sales $3,600,000 Operating costs including depreciation...
we R N Rim as a period of non constant growth. Quantitative Problem 1: Assume today...
we R N Rim as a period of non constant growth. Quantitative Problem 1: Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax operating income (EBIT(1 - T)] will be $420 million and its 2017 depreciation expense will be $60 million. Barrington's 2017 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2017 will be $25 million. The firm's free cash flow is expected to grow...
Question 2: On November 1, 2019. Mr. Daniel Kim, an individual stock investor, pays attention to...
Question 2: On November 1, 2019. Mr. Daniel Kim, an individual
stock investor, pays attention to the news that Dongguk Corp, may
report earnings surprise thanks to the booming demand for natural
gas pipe associated with rising shale gas production in the US. In
order to make an investment judgement through a price multiple
comparison method, Mr. Kim chooses to deploy PER (Price-Earnings
Ratio) computed as following: PER per share stock price of Dongguk
Corp. (November 1, 2019) / expected...
Can anyone assist me in interpreting this CAPM Model for Ford Motor Co. ? I'm trying...
Can anyone assist me in interpreting this CAPM Model for Ford
Motor Co. ?
I'm trying to understand what I should highlight in a discussion
of the results and the conclusion that can be drawn from those
results.
As per my textbook, the discussion holds 20 marks, while the
conclusion is worth 10 marks.
The relevant information is shown below.
tes of Retu 36. Jan 31, 2016 11.94 37. Feb 29, 2016 12.51 33. Mar 31, 2016 13.50 12.4290|1940.24 |-5.07%...
Can anyone assist me in interpreting this CAPM Model for Ford Motor Co. ? I'm trying...
Can anyone assist me in interpreting this CAPM Model for Ford
Motor Co. ?
I'm trying to understand what I should highlight in a discussion
of the results and the conclusion that can be drawn from those
results.
As per my textbook, the discussion holds 20 marks, while the
conclusion is worth 10 marks.
The relevant information is shown below.
tes of Retu 36. Jan 31, 2016 11.94 37. Feb 29, 2016 12.51 33. Mar 31, 2016 13.50 12.4290|1940.24 |-5.07%...
Use the following information for the next three problems, Year Cash Flow 1 $12,500 2 $14,000...
Use the following information for the next three problems, Year Cash Flow 1 $12,500 2 $14,000 3 $10,000 4 $11,000 5 $16,000 5. What is the NPV of above project if the initial investment was $35,000? Assume a cost of capital of 11% 6. Calculate the IRR assuming a cost of capital of 11%. 7. Calculate the MIRR of the project assuming a cost of capital of 11%. ___________________________________________________________________________ 8. Suppose that you are approached with an offer to purchase...
1. Exercise 5.1 The forecasting staff for the Prizer Corporation has developed a model to predict...
1. Exercise 5.1 The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales, S, vary jointly with disposable personal income, Y, and the population between ages 15 and 40,Z, and inversely with the price of the snowmobiles, P. Based on past data, the best estimate of this relationship is: where k has been estimated (from past data) to equal 100 If Y $13,000, Z- $1,200, and P...
A) Using the multi-stage dividend discount model (DDM),
calculate the value of FLT shares. Use scrap paper for your
workings (15 MARKS).
Assume that dividends in the next three years (starting from
year 2017) will grow at a rate of 13% annually. Further, it is
assumed that dividends will grow at a rate of 11% for the next four
years (year 4 to 7). Thereafter it is assumed that the company will
grow at a constant growth rate of 7%...
Basic Stock Valuation: Free Cash Flow Valuation Model The recognition that dividends are dependent on earnings, so a reliable dividend forecast is based on an underlying forecast of the firm's future sales, costs and capital requirements, has led to an alternative stock valuation approach, known as the free cash flow valuation model. The market value of a firm is equal to the present value of its expected future free cash flows: Market value of company FCF (1+WACC) + FCF (1+WACC)...
2. a) It is 1 July 2022. Martins plc has gone through a period of retrenchment which has meant that for the last six years dividends have been held constant at 5p per share per annum. A dividend of 5p per share has been paid on the 30 June 2022. The market expects the annual dividends to remain at this level for the next three years (the next dividend is due in one year's time) and then to increase at...
we R N Rim as a period of non constant growth. Quantitative Problem 1: Assume today is December 31, 2016. Barrington Industries expects that its 2017 after-tax operating income (EBIT(1 - T)] will be $420 million and its 2017 depreciation expense will be $60 million. Barrington's 2017 gross capital expenditures are expected to be $100 million and the change in its net operating working capital for 2017 will be $25 million. The firm's free cash flow is expected to grow...
Question 2: On November 1, 2019. Mr. Daniel Kim, an individual
stock investor, pays attention to the news that Dongguk Corp, may
report earnings surprise thanks to the booming demand for natural
gas pipe associated with rising shale gas production in the US. In
order to make an investment judgement through a price multiple
comparison method, Mr. Kim chooses to deploy PER (Price-Earnings
Ratio) computed as following: PER per share stock price of Dongguk
Corp. (November 1, 2019) / expected...
Can anyone assist me in interpreting this CAPM Model for Ford
Motor Co. ?
I'm trying to understand what I should highlight in a discussion
of the results and the conclusion that can be drawn from those
results.
As per my textbook, the discussion holds 20 marks, while the
conclusion is worth 10 marks.
The relevant information is shown below.
tes of Retu 36. Jan 31, 2016 11.94 37. Feb 29, 2016 12.51 33. Mar 31, 2016 13.50 12.4290|1940.24 |-5.07%...
Can anyone assist me in interpreting this CAPM Model for Ford
Motor Co. ?
I'm trying to understand what I should highlight in a discussion
of the results and the conclusion that can be drawn from those
results.
As per my textbook, the discussion holds 20 marks, while the
conclusion is worth 10 marks.
The relevant information is shown below.
tes of Retu 36. Jan 31, 2016 11.94 37. Feb 29, 2016 12.51 33. Mar 31, 2016 13.50 12.4290|1940.24 |-5.07%...
1. Exercise 5.1 The forecasting staff for the Prizer Corporation has developed a model to predict sales of its air-cushioned-ride snowmobiles. The model specifies that sales, S, vary jointly with disposable personal income, Y, and the population between ages 15 and 40,Z, and inversely with the price of the snowmobiles, P. Based on past data, the best estimate of this relationship is: where k has been estimated (from past data) to equal 100 If Y $13,000, Z- $1,200, and P...
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