Answer the following requirements assuming a discount rate (WACC) of 735, a terminal period growth rate of 2% common shares outstanding of 328.1 millon, and net nonoperating obligations (NNO) of 16.204 million (al Estimate the value of a share of ITWS common stock using the discounted cash flow (DC model as of December 31, 2018 Instructions: - Round all answers to the nearest whole number, except for discount factors, shares outstanding (do not round, and stock price per share. - Round discount factors to 5 decimal.places - Round stock price per share to two decimal places -Do not use negative signs with any of your answers Reported Forecast Horion 2018 2019 2020 2021 2022 Terminal Period (S milions) YON UseaO FCFF INOPAT-increase in NOA) Discount tactor 1 a Present vale of horuon FCF Cum present value of hordon FCFFS Present value of terminal FCF Total frm valve NNO Fim equity value Chan quisandiog imilions)
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
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