АВС ΧYΖ Discount rate (r) Historical growth rate of dividends Not available. Cannot compute without dividends Sustainable growth rate Fundamental value using dividend growth model with the historical growth rate Fundamental value using the dividend growth model with the sustainable growth rate Fundamental value using residual income growth model with the historical Not available. Cannot compute without dividends Not available. Cannot compute without dividends Not available. Cannot compute without dividends growth rate Fundamental value using the residual income growth model with the sustainable growth rate
АВС ΧYΖ Discount rate (r) Historical growth rate of dividends Not available. Cannot compute without dividends Sustainable growth rate Fundamental value using dividend growth model with the historical growth rate Fundamental value using the dividend growth model with the sustainable growth rate Fundamental value using residual income growth model with the historical Not available. Cannot compute without dividends Not available. Cannot compute without dividends Not available. Cannot compute without dividends growth rate Fundamental value using the residual income growth model with the sustainable growth rate
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Looking at Figure (1), complete the figure in (2)
Transcribed Image Text:(2)
Calculation Questions on Stock Valuation
For each company find the following. Enter only the final number. Include a separate
document that shows your work. The necessary formulas are as follows:
Discount rate; r = risk – free rate + B * stock market premium
The growth rate of dividends (or EPS)
D
t+n
Historical growth rate (geometric mean): g =
- 1
Sustainable growth rate: g = ROE*(1- Payout ratio), where
Net Income
ROE =
Equity
D,(1+r)
Dividend Growth Model: P =
r-g
EPS (1+g)-B,g
Residual income model: P
where EPS is earnings per share,
r-g
and B is the book value of assets.
ABC
ΧΥΖ
Discount rate (r)
Historical growth rate of
dividends
Not available. Cannot
compute without dividends
Sustainable growth rate
Fundamental value using
dividend growth model with
the historical growth rate
Fundamental value using the
dividend growth model with
the sustainable growth rate
Fundamental value using
residual income growth
Not available. Cannot
compute without dividends
Not available. Cannot
compute without dividends
Not available. Cannot
compute without dividends
model with the historical
growth rate
Fundamental value using the
residual income growth
model with the sustainable
growth rate
Transcribed Image Text:(1)
Consider two stocks for two companies; ABC and XYZ companies. The relevant data
for each
АВС
XYZ
Current Price
467
89
Risk free rate
0.015
0.015
Beta
2
1.5
Stock market
0.085
0.085
premium
Dividend in March
30
1990
XYZ is a new company. It has not
yet paid dividends
Dividend in March
58
2020
Return on equity
Payout ratio
Earnings per share
(EPS)
Book value
0.15
0.2
0.7
80
12
550
100
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