2.3 calc

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Texas Tech University *

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5320

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Finance

Date

Apr 3, 2024

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xlsx

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21

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Question 1 Div0 $3.10 Time Div g 2% forever 0 $3.10 1 $3.16 Div10? $3.779 2 $3.23 3 $3.29 Question 2 4 $3.36 5 $3.42 Div0 $2.15 6 $3.49 g1 20% 1-4 7 $3.56 g2 2% 5-forever 8 $3.63 9 $3.70 Div5? $4.547 10 $3.779 Question 3 Earnings $25,000,000 million Retention Ratio 30% Payout Ratio 70% Retained Earnings $7,500,000 Historical ROE 12% Earnings_1 $25,900,000 g 3.600% g = retention ratio * ROE Question 4 Div $15 Price $120 r? 0.1250 r = Div/price Question 5 Div $8 r 9% price? $88.889 P = Div/r Questions 6 - 8 Microsoft Corp (MSFT) has the following financial information: Sales 211.92 billion Suppose the Texas Oil Company just paid a dividend of $3.10 per share.  Th The Abbott Company just paid a dividend of $2. Whitmore Inc. just reported earnings of $25 million.  It plans to retain 30% Jokoy Inc. has an issue of preferred stock outstanding that pays a dividend o Coconut Co. has an issue of preferred stock outstanding that pays a dividend
Net income 72.36 billion Total Book Equity 194.68 billion Price Per Share $318.02 Shares Outstanding 7.43 billion Benchmarks: Price / Earnings 21.49 Price / Sales 2.4 Price / Book 3.79 EPS 9.7388963660835 Valuation 209.28888290713 Sales Per Share 28.522207267833 Valuation 68.4532974428 BV Equity Per Share 26.201884253028 Valuation 99.305141318977 Question 9 Div1 $2 P0 = Div1/(r-g) g 3% forever r 7.25% price? $47.06 Question 10 Div0 $3 Time Div Price $317 0 $3 g 3% forever 1 $3.09 r? 3.9464% 6. Given the provided information, calculate the comparable valuation price based on Price / E 7. Given the provided information, calculate the comparable valuation price based on Price / S 8. Given the provided information, calculate the comparable valuation price based on Price / B Rudy-G Co. will pay a dividend of $2 per share next year.  The dividends ar Microsoft just paid a dividend of $3 per share.  The price of the stock is $31
Question 11 Div0 $3.25 g 3% r 6% Price per share? $111.58 Question 12 g 2% 6-forever Time Div TV r 7% 1 $10 2 $8 P0? $118.99 3 $8 4 $6 5 $6 $122.40 6 $6.12 Question 13 Div0 $1.82 Time Div TV g1 35% 1-5 0 $1.82 g2 2% 6-forever 1 $2.46 r 9% 2 $3.32 3 $4.48 P0? $95.38 4 $6.05 5 $8.16 $118.92 6 $8.32 Question 14 g2 5% 7-forever Shares Outs 7.43 million r 8% Comparable P/E 21 ($ in Billions) 1 2 3 4 5 Sales 232 244 256 269 282 Costs 120 126 132 139 146 EBIT 112 118 124 130 136 Taxes 40 42 44 46 48 OCF (net income) 72 76 80 84 88 Darden Inc. just paid a dividend of $3.25.  The dividends are expected to gro West Side Co. expects the following dividends to be paid over the next 5 ye Clue Co. just paid a dividend of $1.82 per share.  The dividends are expecte Microsoft Co. has the following projected sales, costs, net investment, and f
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Net investment 50 53 55 58 61 FCF 22 23 25 26 27 Terminal Val 933.3333333 22 23 25 26 960.3333333 Market Cap $732.63 P0? $98.60 Question 15 ($ in Billions) 1 2 3 4 5 Sales 232 244 256 269 282 Costs 120 126 132 139 146 EBIT 112 118 124 130 136 Taxes 40 42 44 46 48 OCF (net income) 72 76 80 84 88 Net investment 50 53 55 58 61 FCF 22 23 25 26 27 Terminal Val 22 23 25 26 27 Market Cap $1,332.55 P0? $179.35 Question 16 g1 0 Time Div g2 2.50% 3-forever 1 3.991549296 r 9% 2 3.991549296 P0 $60 3 4.091338028 Div1? 3.9915492957747 <<guessed first Question 17 Straight Voting Shares Outs 625000 Price $60 To buy seat (shares) 312501 To buy seat (price) $18,750,060 Calculate the above company stock price using the P/E comparable approac Amos, Inc. is expected to pay an equal dividend at the end of the next two y After completing your corporate finance class, you feel the next challenge a
Question 18 how much will it cost you to buy a seat if the company has 4 directors up fo Cumulative Voting To buy seat (%) 0.17 To buy seat (shares) 104166.66666667 To buy seat (price) $6,250,000 Question 19 Div1 $2.12 r = (Div1/P0) + g g 3% forever P0 $42 r? 8.0476% Question 20 Calculate the dividend yield, assuming the stock sells for $42 per share. (En DY 0.0504761904762 DY = Div/Price Div = DY*Price The next dividend payment will be $2.12 per share.  The dividends are antic
Time Div 0 $2.15 1 $2.58 2 $3.10 3 $3.72 4 $4.46 5 $4.55 he dividends are expected to grow at 2%, forever.  Calculate the projected dividend 10 years from of its earnings and pay the rest as dividends.  The historical ROE for the firm is 12%, a figure ex of $15 annually in perpetuity.  If this issue currently sells for $120 per share, calculate the require d of $8 per year in perpetuity.  The required rate of return on this stock is 9%.  Calculate the impl
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P0 = Div1/(r-g) r = (Div1/P0) + g Earnings.  (Round to 3 decimals) Sales.  (Round to 3 decimals) Book.  (Round to 3 decimals) re expected to grow at 3% per year forever.  Calculate the stock price assuming investors require 17.  Dividends are expected to grow at 3%, forever.  Calculate the implied rate of return on this in
Combine $10 $8 $8 $6 $128 Combine $1.82 $2.46 $3.32 $4.48 $6.05 $127.08 6 296 153 143 50 92 ow at 3% forever, and investors require a 6% rate of return on their investment.  Calculate the pri ears: $10, $8, $8, $6, and $6. Afterward, the company pledges to maintain a constant growth rate ed to grow at 35% over the next five years, and then the dividends will grow at 2% forever.  Calcu free cash flow in millions. The anticipated growth rate in free cash flows after year 6 is 5% per ye
64 28 6 296 153 143 50 92 64 28 1932 1960 TV Combine 3.991549296 62.94366197 66.93521127 $60.00 ch to find the terminal value.  (Round to 2 decimals)  years.  Thereafter, the dividend will grow at a constant annual rate of 2.5%, forever.  The current s ahead is to serve on the board of directors of Fairbanks Enterprises. Unfortunately, you will be the
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or election and uses cumulative voting? nter percentages as decimals and round to 4 decimals) cipated to maintain a growth rate of 3% forever.  Calculate the implied rate of return, assuming th
m today. (Round to 3 decimals) xpected to continue for the foreseeable future. Calculate the projected earnings one year from toda ed rate of return on the investment. (Enter percentages as decimals and round to 4 decimals) lied price per share.  (Round to 3 decimals)
a 7.25% rate of return on their investment. (Round to 2 decimals) nvestment.  (Enter percentages as decimals and round to 4 decimals) 
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ice per share. (Round to 2 decimals) of 2%, forever.  If the required rate of return is 7%, calculate the current share price.  (Round to 2 ulate the current price per share if investors require a 9% return on their investment. (Round to 2 ear forever.  There are 7.43 billion shares outstanding, and investors require a return of 8% on the
stock price is $60.  The appropriate rate of return on the stock is 9%.  Calculate the next year's di e only person voting for you.  If the company has 625,000 shares outstanding, and the stock curre
he stock sells for $42 per share. (Enter percentages as decimals and round to 4 decimals)
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ay.  (Round to 2 decimals)  Enter the full number, e.g. 5 million should be 5,000,000.
2 decimals)  decimals)  e company's stock and a comparable P/E ratio of 21. Calculate the company stock price using the
ividend payment. (Round to 3 decimals) ently sells for $60, how much will it cost you to buy a seat if the company uses straight voting?
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constant growth model to find the terminal value.  (Round to 2 decimals) 
1 $3.779 2 $4.547 3 25,900,000 4 0.1250 5 88.8890 6 209.289 7 68.453 8 99.305 9 47.06 10 0.0395 11 55.79 $108.33 111.5833333 12 118.99 13 95.38 14 0.1 98,604.64 98.60464006 15 0.18 179,347.77 $179.35 16 3.992 17 18,750,060 18 7,500,000 $6,250,000 7500060 19 0.0805 20 0.0505
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