20 Expected Return Vs. Required Return 21 Portfolio Planning 21 Dividend growth model 24 Corporate Valuation Model 24 Constant & non-constant growth of dividend 27 Actual prices Vs. Expected Prices 27 Weighted average cost of capital (WACC) 28 Trend of financial statements in last five years 30 Acknowledgement First of all we all are thankful to one and only the Almighty Allah for always guiding us in the thick and thin and giving us strengths and courage
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Ordinary share price (ex div basis) Earnings per share Proposed payout ratio Dividend per share one year ago Dividend per share two years ago Equity beta 5 million $3·30 40·0c 60% 23·3c 22·0c 1·4 Other relevant financial information Average sector price/earnings ratio Risk-free rate of return Return on the market 10 4·6% 10·6% Required: Calculate the value of Danoca Co using the following methods: (i) price/earnings ratio method; (ii) dividend growth model; and discuss
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requires knowledge of the long-term growth rate‚ operating margin‚ weighted average cost of capital‚ discount rate and reinvestment rate. This makes using discounted cash flows especially difficult young companies. The discounted cash flow‚ in Exhibit #1 below‚ shows an imputed value of $109 per share versus the current market price of $246 per share. This calculation is based on an industry average weighted average cost of capital of 10% and a discount rate of 4%. However the key point is that the
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has a performance advantage over its competition‚ it is said to enjoy a competitive advantage. This can be by higher perceived value by the customer or by lowering costs. C. Economic Value – simply the difference between the perceived benefits gained by a customer who purchases a firm’s products or services and the full economic cost of these products or services. 1. The size of a firm’s competitive advantage is the difference between the economic value a firm is able to create and the economic
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ONGC Ke – cost of equity |Rm – expected returns on emerging markets |13 | |Rf – risk free return |8.5 % | |Beta |0.2835 | |Ke = Rf + beta( Rm-Rf)
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could cancel Spikes lease at any reasonable notice and construct high-rise apartment buildings in its place however Spikes reasoned that since there was no pressure from the neighborhood he would not face too much risk in this regard. As it is‚ the cost of a potential lease cancellation cannot be quantified and will affect the going concern of the business. Apart from that the business is in a very healthy condition‚ having around 130 regular teams per season that feed its main operations i.e. volleyball
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Cost of Capital Estimate for Midland Energy Resources‚ Inc. In the first section of my report‚ I list out the main models and methods applied to estimate the cost of capital for Midland’s three divisions‚ general assumptions made and the corresponding justifications. In the second section‚ Calculations‚ I not only compute the cost of capital based on the general assumptions previously made‚ but also discuss specifics of each division and the additional adjustments or assumptions made to justify
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immediate acquisition plans‚ the public offering of their shares will provide new capital for them to continue to expand. Only 5% of their revenue comes from outside of the United States‚ and with increased capital from an IPO‚ Rosetta Stone can look to pursue new markets (Schill‚ 2009). Whether they plan to increase their market share through internal investment or acquisitions of competitors‚ the increase in available capital is a huge advantage for a firm with such an aggressive growth strategy in mind
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INTRODUCTION * Wrigley has a one sided capital structure * Their interest rates has been at their lowest in 50 years * However‚ they have the leading market share in a stale low technology business * Blanka Dobrynin‚ the managing partner of Aurora Borealis LLC (a company who used a hedge fund to invest in companies who are in distress‚ merger arbitrage‚ change-of-control transactions‚ and recapitalization) wanted to investigate a potential investment of $3B in Wrigley * Wrigley
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I. STATEMENT OF THE PROBLEM Star River Electronics is a CD-Rom manufacturing company based out of Singapore. Star River was founded as a joint venture between Starlight Electronics Ltd.‚ and an Asian venture-capital firm called New Era Partners. Star River became favorably recognized as a supplier of high-quality CD-ROMs as the industry grew quickly during the mid to late 1990s. New Chief Executive Officer Adeline Koh is tasked with navigating the CD-ROM manufacturing company through tough times
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