Share Valuation Models 1. Dividend Valuation Models Discounted Dividend Model (DDM) Constant Growth DDM Differential Growth DDM 2. Earning-based Models Earnings Capitalisation without growth Earnings Capitalisation with growth Price-Earning Multiple Model 3. Free Cash Flow Models Discounted Free Cash Flow to Equity (FCFE) model Discounted Free Cash Flow to the Firm (FCFF) model 4. Book Valuation (Net Asset Value) Model Discounted Dividend Model The dividend discount model (DDM) is
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Management Summary 2 Active Investor Strategy 2 Effects of $3 Billion in New Debt for Dividend or Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 2 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 4 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 5 Appendices 5 i. Objectives
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MBA 509 Recommended Chapter Questions These questions are the focus of what I am covering on the final exam. Understand the answers to these questions and should not be surprised by anything on the exam. Chapter 14: Capital Structure in a Perfect Market 14-5. Suppose Alpha Industries and Omega Technologies have identical assets that generate identical cash flows. Alpha Industries is an all-equity firm‚ with 10 million shares outstanding that trade for a price of$22 per share. Omega Technologies
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that has sole voting rights but restricted dividends for a specified number of years. 9-5 Stock price versus Intrinsic Values Stock price - simply the current market price‚ and it is easily observed for publicly traded companies. Intrinsic value - represents the “true” value of the company’s stock‚ cannot be directly observed and must instead be estimate 9-6 Different Approaches for Estimating the Intrinsic Value of a Common Stock A. Discounted dividend model zero-growth constant-growth model
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Assignment #7 P13-7A (a) General Journal Date A/C Title Ref Debit Credit Feb 6 Cash 111‚000 Preferred Shares (1‚000 x $111) 111‚000 To record issue of 50‚000 preferred shares at $111 July 15 Preferred Shares (2‚000 x $106) 212‚000 Common Shares 212‚000 To record conversion of 2‚000 preferred shares into 16‚000 common shares at average cost of $106
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equity holders‚ dividends or equity free cash flow (equity FCF)‚ at their required rate of return. Now‚ the question would be: which cash flow should we discount? Damodaran (Damodaran Online‚ 2002) provides a straightforward answer. We should discount dividends for firms which pay dividends that are close to the equity FCF over a long period and for those companies where equity FCF is difficult to determine. On the other hand‚ we should discount equity FCF for firms that pay dividends which are considerably
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Stocks Name Instructor XACC / 291 Date Stocks 2. Stocks shares known as “preferred”‚ because in the event of the company being liquidation‚ the preferred stock shares will receive dividends‚ and business assets before the common shares (Crook‚ 2000). If the company does not have enough money to pay both the preferred shares‚ and the common shares‚ the preferred shareholder must receive his shares first. Many different types of preferred
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CIR vs PAL FACTS: PHILIPPINE AIRLINES‚ INC. had zero taxable income for 2000 but would have been liable for Minimum Corporate Income Tax based on its gross income. However‚ PHILIPPINE AIRLINES‚ INC. did not pay the Minimum Corporate Income Tax using as basis its franchise which exempts it from “all other taxes” upon payment of whichever is lower of either (a) the basic corporate income tax based on the net taxable income or (b) a franchise tax of 2%. ISSUE: Is PAL liable for Minimum Corporate Income
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CORPORATE FINANCE END TERM PROJECT To study the Financials of ICICI bank‚ HDFC bank and Axis bank and to conduct Comparative Financial Analysis among them. UNDER THE GUIDANCE: Dr. ASHISH GARG PROGRAM COORDINATOR PGDM (FINANCE)
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value of Eagles Electronics 4 Residual theory of dividends 9 Reasons why sometimes firms opt for dividend cuts 9 Impact of dividend cut on Eagles Electronics 10 Impact of takeover of the company (Benefits) 13 Assessing impact of takeover of produtos compostos by eagles electronics 14 Conclusion 15 References 17
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