Suppose you forecasted these cash flows given below in the year 2006 for the years 2007 to 2011lowa given when the shares were traded at $ 1.05 2006 2007 2008 2009 2010 2011 Cash flows from operations 4060 | 4450 4800 | 5170 5510 Cash investment 1030 1220 1250 960 700 The book value of net debt is $5,100,000. The continuing value for perpetuity can be taken at a growth of 5%. The required rate of return is 9%. Free cash flows are expected to grow at 5% per year after 2011. Shares outstanding were 90,000,000. Required: Calculate value of equity in 2006 and value to price ratio.

Suppose you forecasted these cash flows given below in the year 2006 for the years 2007 to 2011lowa given when the shares were traded at $ 1.05 2006 2007 2008 2009 2010 2011 Cash flows from operations 4060 | 4450 4800 | 5170 5510 Cash investment 1030 1220 1250 960 700 The book value of net debt is $5,100,000. The continuing value for perpetuity can be taken at a growth of 5%. The required rate of return is 9%. Free cash flows are expected to grow at 5% per year after 2011. Shares outstanding were 90,000,000. Required: Calculate value of equity in 2006 and value to price ratio.

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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Please show work in Excel.
Use the following inputs and the finite horizon from of the residual income model to compute the value of Southern Trust Bank (STB) shares as of 31 December 2007: i. ROE will continue at 15% for the next five years and 10% thereafter with all earnings reinvested (no dividends paid) ii. Cost of equity is 10% iii. Beginning period book value at year-end 2007 is $10
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Please Solve In 20mins
Procter and Gamble (PG) paid an annual dividend of $2.79 in 2018. You expect PG to increase its dividends by 7.9% per year for the next five years (through 2023), and thereafter by 2.7% per year. If the appropriate equity cost of capital for Procter and Gamble is 8.9% per year, use the dividend-discount model to estimate its value per share at the end of 2018.
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