clean surplus means dividends are not included.
clean surplus relationship is as follows:
Ending book value = Beginning book value+Net income - Dividends
= $17.65+$6.20-$3.48
= $ 20.37
The ending book value = $ 20.37
Calculation of share price using residual income model.
V=B + B*(ROE - Required return/Required return - growth rate)
Here B is current book value and V is price of share.
V = $ 20.37+$ 20.37*(13.50 - 12.63/12.63 - 12.01)
= $ 48.95
Problem 6-29 Residual Income Model (LO3, CFA9) Beagle Beauties engages in the development, manufacture, and sale...
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 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 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...
Savod 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 ped Dividends per share Return on equity Book value per share $4.32...
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%...
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...
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...
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...
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...