capital? Do you agree with Joanna Cohen’s WACC calculation? Why or why not? 2 If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and be prepared to justify your assumptions. 3 Calculate the costs of equity using CAPM‚ the dividend discount model‚ and the earnings capitalization ratio. What are the advantages and disadvantages of each method? Introduction : Solution Question 1 : The WACC is the weighted average cost of capital for a firm. It is
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XYZ Company Limited Date Valuation Report: DUMMY Executive Summary INDUSTRY: XX XYZ Company Limited (hereinafter referred to as “XYZ” or “the company”) is a XX manufacturing company and markets its products under the brand name XX in the XX region of India. Business valuation summary of XYZ Multiple used EV/tonne method Equity value Rs mn Value per share (Rs) Rs 5‚809 per tonne EV/EBITDA method 4.5x Discounted Cash Flow method NA Book value (FY10) NA Equity
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References: Current Ratio Definition - What is Current Ratio? (n.d.). Investor Glossary. Retrieved March 11‚ 2011‚ from http://www.investorglossary.com/current-ratio.htm Dividend Payout Ratio Calculation Loth‚ R. (n.d.). Cash Flow Indicator Ratios: Dividend Payout Ratio. Investopedia. Retrieved March 11‚ 2011 from http://www.investopedia.com/university/ratios/cash-flow-indicator/ratio4.asp Loth‚ R Loth‚ R. (n.d.). Debt Ratios: The Debt Ratio. Investopedia‚ . Retrieved
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Establishment of estimated growth rate in earnings and dividends. XYZ Company’s current EPS is $4.75. It was $3.90 a year ago. The company pays out 35% of its earnings as dividends‚ and the stock sells for $45. a. Calculate the past growth rate in earnings. b. Calculate the next expected dividend. Assume that the past growth rate will continue Answer: If payout ratio is constant‚ then dividend growth rate will be same as earnings growth rate. a) dividend growth rate over the last year = (4.75/3.90)
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growth in dividends • Forecasted dividends for the next several years plus sale of the stock in the future • The three-stage dividend model • The price/earnings approach 3.1.1 The perpetual growth in dividends The standard method of finding stock price for perpetual dividends for a firm‚ given the firms dividend one year into the future and an expected growth rate for the dividend‚ is as follows: P0 = D1 (Ke − g) where Ke is the investors’ required return‚ D1 is next year’s dividend and g is
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models attempt to find the intrinsic or "true" value of an investment based only on fundamentals. Looking at fundamentals simply mean you would only focus on such things as dividends‚ cash flow and growth rate for a single company‚ and not worry about any other companies. Valuation models that fall into this category include the dividend discount model‚ discounted cash flow model‚ residual income models and asset-based models. In contrast to absolute valuation models‚ relative valuation models operate
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Tapley Inc. currently has assets of $5 million‚ zero debt‚ is in the 40% federal-plus-state tax bracket‚ has a net income of $1 million‚ and pays out 40% of its earnings as dividends. Net income is expected to grow at a constant rate of 5 percent per year‚ 200‚000 shares of stock are outstanding‚ and the current WACC is 13.40%. The company is considering a recapitalization where it will issue $1 million in debt and use the proceeds to repurchase stock. Investment bankers have estimated that if
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profitability of the two major banks in India; SBI and ICICI. The variables taken for the study are Operating profit margin (OPM)‚ Gross profit margin (GPM)‚ Net profit margin (NPM)‚ Earning per share (EPS)‚ Dividend per share‚ Return on Equity (ROE)‚ Return on Assets (ROA)‚ Price Earnings Ratio (PER)‚ Dividend payout ratio (DPR).The study brings out the comparative efficiency of SBI and ICICI. INTRODUCTION With the economy surging‚ things are getting better in the Banking Industry. There are plenty of changes
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AF3313-BUSINESS FINANCE Individual Assignment Au Kin Cheung‚ Gap (12059052d) STOCK PRICE OF RAGAN COMPANY From the question‚ the basic information is listed as follow: The PE ratio is calculated by: Stock Price / EPS The average PE ratio is equal to the industry’s benchmark PE : Sum of individual company PE ratio/ Total number of companies From the above industry’s benchmark PE ratio: Company Total number of shares Reported Earnings EPS Stock Price Regan Thermal System 100000 US$320‚000 US$3
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Debt Policy at UST Attributes and Risks of UST UST is the market leader in the moist tobacco segment. In a struggling tobacco industry‚ UST has shown consistent growth over the past few decades. Despite the decrease in demand for smoked (cigarette) tobacco‚ there is a growing demand for UST’s products. The perception that smokeless tobacco is healthier than smoked tobacco has helped the company to build a strong customer base. Therefore‚ despite some legislative setbacks‚ the company is growing
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