Your Managing Director asks you to include valuations based onComparable Forward PE multiples given that peer capital structures havebeen relatively similar.She asks you to assume a 14x PE multiple on forwarddiluted EPS, and a 10% growth rate over LTM diluted EPS to calculateforward EPS, which is being assumed by industry analysts.Using theaforementioned assumptions for Comparable Transactions PE multiples,what is the implied AEO share price based on the latest data provided toyou from its Corporate filings as of June 2017? 2032.1 diluted

Approach to solving the question: Step 1: Compute the Forward EPS The initial step entails…

Answered: Your Managing Director asks you to…

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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Labrador technologies Inc. plans to become public soon. The board of directors would like to know the value of common equity and have asked for your opinion. The firm has $1,249,917 in preferred equity and the market value of its outstanding debt equals $2,049,396. The WACC for this firm is estimated to be 8.92%. For this example assume the current assets are zero. Use the DCF valuation model with the expected FCFs shown below; year 1 represents one year from today and so on. The company expects to grow at a 3.0% rate after Year 5. Rounding to the nearest penny, what is the value of common equity? Free Cash Period Flow Year 1 $1,370,274 Year 2 $1,761,479 Year 3 $1,909,652 Year 4 $2,361,090 Year 5 $2,744,645
Company A has a market capitalization of $2410539999 and 22833777 shares outstanding. It plans to distribute $35977773 through an open market repurchase. Assuming perfect capital markets: What will the price per share of the firm be right after the repurchase?
Given the information below for HooYah! Corporation, compute the expected share price at the end of 2022 using price ratio analysis. Assume that the historical (arithmetic) average growth rates will remain the same for 2022. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Exclude negative annual P/E and P/CFPS ratios from the average PE and average P/CFPS ratio calculations. When computing annual growth rates, use a positive sign on the annual rate of change if the per share value increased in value and use a negative sign on the annual rate of change if the per share value deceased in value. 18 Year Price EPS CFPS 2016 $ 15.00 -7.00 -16.00 2017 $ 51.50 -6.29 -13.50 2018 $ 123.00 -2.10 2019 $ 200.00 -0.45 -3.10 -0.15 2020 $ 90.00 0.03 0.38 2021 $ 20.50 0.06 0.08 SPS 12.00 20.50 21.60 25.10 28.60 28.95 hai Roo Share Price Using PE ratio Using P/CF ratio Using P/S ratio ogyp
S. Bouchard and Company hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: DO $0.85; PO $22.00; and g 6.00% (constant). The CEO thinks, however, that the stock price is temporanly depressed, and that it will soon rise to $34.00. Based on the DCF approach, by how much would the cost of common from retained earnings change if the stock price changes as the CEO expects?.
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Your friend Carra is interested in investing in Spark common stocks. She knows that you are taking finance and have learned about stock valuation using historical dividends information. Carra has collected the following dividends data on Spark and asked for your help to calculate the stock price of this company. Use the Constant Growth Dividend model you learned to perform stock valuation for this company. Use the past dividends data to estimate the constant growth rate (it is assumed that the dividends will grow at its historical average growth rate from now onwards) for the dividends. Under the assumption that Spark will continue this dividend pattern forever and Carra wants to earn an annual rate of return of 11% on this investment, what price would Carra be willing to pay for the stock price of this company? What happens to the stock price that Carra would be willing to pay if her required rate of return is 15% (which is greater than 10%)? Briefly interpret your answers.…
Anle Corporation has a current stock price of $19.49 and is expected to pay a dividend of $1.25 in one year. Its expected stock price right after paying that dividend is $21.26. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain?
High Adventure is considering a new project that is similar in risk to the firm's current operations. Thefirm maintains a debt-equity ratio of .55 and retains all profits to fund the firm's rapid growth. Howshould the firm determine its cost of equity?Select one:a. By averaging the costs based on the dividend growth model and the capital asset pricing model.b. By adding the market risk premium to the after tax cost of debt.c. By using the dividend growth model.d. By using the capital asset pricing model.e. By multiplying the market risk premium by 1.55

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