this formulation. P0 = E1 × p (Ke − g) g = (1 − p) × Ke where E1 is the earnings 1 year into the future‚ and p is the payout ratio or the percentage of earnings paid in dividends. For this calculation an estimated earnings per share for the following year was found to be $4.11. This is the 2010 earnings per share of $3.72 increased by the quoted 10.4% (which is also roughly the growth rate over the last 6 years). If the 1 arithmetic average of the dividend payout ratio is taken over the life of
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Chapter 7 Stock Valuation Instructor’s Resources Overview This chapter continues on the valuation process introduced in Chapter 6 for bonds. Models for valuing preferred and common stock are presented. For common stock‚ the zero growth‚ constant growth‚ and variable growth models are examined. The relationship between stock valuation and efficient markets is presented. The role of venture capitalists and investment bankers is also discussed. The free cash flow model is explained and compared
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the financial ratio analysis‚ that provide information about the financial performance of the firm‚ which can be used by different stakeholders to evaluate the firm’s performance and help them on taking investment and financing decisions. 2. Cash Flow Methods‚ such as the discounted cash flow model (DCF) and the dividend discount model (DDM)‚ that evaluate the firm based on its general cash flows during a long-period of time. 3. Market Methods‚ such as the price/earnings ratio and earnings multiples
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Corporate Finance Home Wok Chapter 4 Q1: Simple Interest versus compound Interest First City Bank pays 9 percent simple interest on its savings account balances‚ whereas Second City Bank pays 9 percent interest compounded annually. If you made a $5‚000 deposit in each bank‚ how much more money would you earn from your Second City Bank account at the end of 10 years? A: First City Bank: 5000*(1+10*0.09)=9500 Second City Bank: 5000*(1+0.09)10=11837 11837-9500=2337 So we will earn more $2‚337 from
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INTRODUCTION FUNDAMENTAL ANALYSIS Fundamental analysis involves examining the economic‚ financial and other qualitative and quantitative factors related to a security in order to determine its intrinsic value. It attempts to study everything that can affect the security’s value‚ including macroeconomic factors (like the overall economy and industry conditions) and individually specific factors (like the financial condition and management of companies). Fundamental analysis‚ which is also known
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Suggested Questions for Arcadian Microarray Prepare to explain the implications of case Exhibit 1 (Paige Simon’s first task). Based on that exhibit‚ is terminal value a material component of firm values? Drawing on case Exhibit 4 and your own general knowledge‚ where would the various estimators be appropriate? Where would they be inappropriate? (Simon’s second task) Regarding the cash flow forecasts in case Exhibit 5‚ at what point in the future would you set the forecast horizon for the three
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2 1. Using the current ratio‚ discuss what conclusions you can make about each company’s ability to pay current liabilities (debt). The current ratio measures the company’s ability to pay its short term obligations with its short term assets. Between Coca Cola and PepsiCo‚ PepsiCo has a higher current ratio implying that is more capable of paying its obligations. The debt management policies of Coca-Cola in conjunction
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stock/total no. of common stock =60‚000‚000/2‚500‚000 =$24 per share b) P/E ratio = price / earnings = 40/6.25 = 6.4 times c) 1) current required return = Rf + β (Rm – Rf ) = 6% +1.1(8.8 - 6) =9.08% Note: beta is assumed as there is no information of beta in the case study. 2) New required return = Rf + β (Rm - Rf ) = 6% + 1.1 (10-6.6) = 9.74% d) Ke =D1+ G Po 9.74 % = 4 x100+ 0 Po Po = $41.07 e) 1)Ke=D1+ G Po 9.74 % = 4.24 x100+ 6% Po Po=
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For this assignment‚ we decided to run a comparative analysis on the Nasdaq website to look at the specifics of the two stocks. Anabelle and Nicholas chose Apple. Charles chose Ford. Comparing Ford and Apple is not particularly easy because they are two different industries‚ but we contrasted the book numbers. The approach is mostly quantitative instead of qualitative because the two industries are incomparable in terms of their production styles. Both Ford and Apple are stocks that have been around
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History 13 3.1.2. Vision‚ mission & core values 14 3.1.3 Subsidiaries of SingTel 14 3.2. Financial performance 16 3.2.1 Profitability ratios 17 3.2.2 Short-term liquidity ratios 23 3.2.3 Working captial efficiency ratios 25 3.2.4 Long-term solvency ratios 27 3.2.5 Investment ratio 29 3.3. Benchmarking- Cathay Pacific- year 2008 32 3.5.1. Background of M1 32 3.5.2. Financial comparisons 33 3.4. Macro-Environment analysis 35
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