Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)
Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)
14th Edition
ISBN: 9780133740912
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 8.1, Problem 1FOE
Summary Introduction

Case summary:

Investors around the world interested to invest with Peron BM. Even though they did not understand the trading system of Person BM, they are happy with the returns. However, in 2008, Person BM is charged for securities fraud and sentenced to 150 years of imprisonment. Investors pursued claims based on the recent account statements. However, the court allowed to claim up to the difference between the initial investment and the withdrawn amount of the investor.

To determine: The hazards of allowing investors to claim amount based on the recent account statement.

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Boehm Incorporated is expected to pay a $3.20 per share dividend at the end of this year (i.e., D1 = $3.20). The dividend is expected to grow at a constant rate of 9% a year. The required rate of return on the stock, rs, is 15%. What is the estimated value per share of Boehm's stock? Do not round intermediate calculations. Round your answer to the nearest cent.
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According to the picture, It is a DCF method. But I'm not sure how they got the residual value of 1,642 in 1 year and so on. According to this, I don't know the terminal growth rate. Here are some inputs in the picture: NOPAT growth: 10%, ROIIC: 20%,  Cost of capital: 6.7%, reinvestment rate: 10%/20% = 50%. Please Show how to get the exact residual value in the picture shown like first year, second year, third year, and so on.

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Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)

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