Stock Valuation Problems Handout 1. ABC Company’s stock pays a fixed dividend of $2. If an investor’s required rate of return is 8%‚ then what is the value of the stock? $25 2. DEF Ltd. has stock outstanding that pays a fixed $5 dividend and currently markets for $22. What is the expected rate of return for the stock? 22.7% 3. GHI Inc.’s stock is selling for $33 in the market and pays a $3.60 annual dividend. a. If you purchase the stock at its current price‚ what will be the expected
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assumed market risk premium is assumed at being 7.5%. Information gathered from the XYZ Stock Information page (downloaded via IP assignment) reveals the following values: * XYZ’s beta (β) = 1.64 * XYZ’s current annual dividend = $0.80 * XYZ’s 3-year dividend growth rate (g) = 8.2% * Industry Price/Earnings (P/E) = 23.2 * XYZ’s Earnings Per Share (EPS) = $4.87 * U.S. 10-year Treasury bond (risk free rate) = 2.6% * Market Risk Premium = 7.5% 1. Using CAPM (Brooks
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and whether Nike creates value to its shareholders. This paper will analyze Nike’s capital structure‚ scope of international operations‚ recent stock performance‚ and dividend policy. We will examine how Nike’s international operations are conducted‚ its criticisms and strengths. Nike’s debt ratios‚ dividend payout ratios‚ dividend yield‚ and interest coverage ratios over the previous 5 years will be discussed and compared with industry benchmarks. Its bond ratings and the relation between the operating
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The Struggle of Paying College Athletes The Coach of a football team is just as important as any player performing on the field. In fact his power over the team surpasses that of any one single player‚ the coach can determine whether an entire season is a victory or a loss. Perhaps this is why Colleges justify paying a coach millions of dollar a year‚ but the players who are out there beside him next to nothing. Although a lot of the players that perform on the field week by week do get
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4. | Objective | 5 | 5. | Company Address and Background | 6 | 6. | Ratio Analysis | 7 | 7. | Common Size Statements | 15 | 8. | Trend Analysis | 19 | 9. | Capital Structure | 24 | 10. | Weighted Average Cost of Capital | 26 | 11. | Dividend Policy | 29 | 12. | Working Capital Management | 31 | 13. | Bibliography | 34 | 1. Acknowledgement We would like to express the deepest appreciation to our subject lecturer for supervising and guiding us through the course of our report
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whether Wal-Mart is a good investment. Tools such as the dividend discount model‚ Price-earnings Model‚ and the application of the capital asset pricing model will be used to determine if Wal-Mart would be a smart investment at the given time. Using the Dividend Discount Model‚ or DDM‚ is one way to evaluate the worth of Wal-Marts stock. This model states that the current stock price represents the present value of all the expected future dividends discounted at the investors required rate of return
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1 Key data for the calculations: • • • Stock issued for Seahorse = [IS] = 2 Shareholders x 150‚000 shares / each = 300‚000 stocks Dividends paid D0 = 2 x $320‚000 = $640‚000 or DPS = $640‚000 / 300‚000 = $2.13 Calculation of company SeaHorse growth rate gSH = ( 1 – Dividend pay out Ratio) x ROE Dividend Payout Ratio (DPR) is equal to: $640.000 Dividends Dividends Shares = DPS = 300.000 = 42.99% DPR = = EPS 5.08 Net.Income Net.Income Shares Therefore gSH = ( 1 – 42.99% ) x 25% = 14.25% • Calculation
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Financial Management Spring 2010 Project: Financial Analysis for Avon Products Inc Student: Ninoska Trejos April 17‚ 2010 1. Background 1.1 Company Description Avon Products Inc (AVP)‚ founded by David H. McConnell‚ is a leading global beauty company‚ with $10 billion in annual revenue; it commenced operations in 1886 and incorporated in the State of New York on January 27‚ 1916. The company’s stocks are traded in the New York Stock Exchange (NYSE). Its products fall into three
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of the company on stock price. This method can be applied to firms that do not pay dividends as well as new firms‚ by using betas for similar firms (e.g.‚ other firms in the industry). However‚ with CAPM all our projections are based on historical data onto the future‚ because of the estimate of Beta we use. Also‚ CAPM is based on simplifying assumptions about markets‚ returns and investor behavior. The dividend discount model (DDM) is a simple model for valuing equity. It is considered to be a
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over two years • One supply chain with £4.8bn in cumulative saving over 6 years • Dividends per share growth of 7% • Gained market share in 5/7 markets • Service revenue growth of 15% • Free Cash flow of £6.1bn • Share £6.8bn buyback programme nearing completion • Special Dividend 4p per share from Verizon Wireless 44% stake • EPS 13.74 pence basic and 13.65 pence diluted (special dividend excluded) • Dividend growth forecasted at 7% for 2013 • Consensus among 35 investment analyst is that
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