Melia Corporation Current share price $4.65 Current dividend $0.10 Required return on equity 6% Net Income $2.7 Mln Total shareholders’ equity $19 Mln
Melia Corporation Current share price $4.65 Current dividend $0.10 Required return on equity 6% Net Income $2.7 Mln Total shareholders’ equity $19 Mln
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
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Question
Melia Corporation
Current share price
$4.65
Current dividend
$0.10
Required
6%
Net Income
$2.7 Mln
Total shareholders’ equity
$19 Mln
Beta
1.15
Ten year Melia bond yield
3.8%
Melia’s expected growth rate for the next five years is 18%, dropping to a long term
sustainable rate into perpetuity of 4%
For Melia, use a form of the
fair value of the share price.
Is Melia under or over-valued compared to the market
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