Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 9, Problem 26P
Suppose that In January 2006, Kenneth Cole Productions had sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million of debt, and 21 million shares outstanding.
- a. Using the average enterprise value to sales multiple in Table 9.1, estimate KCP’s share price.
- b. What range of share prices do you estimate based on the highest and lowest enterprise value to sales multiples in Table 9.1?
- c. Using the average enterprise value to EBITDA multiple in Table 9.1, estimate KCP’s share price.
- d. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples In Table 9.1?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that in July 2022, Nike Inc. had EBITDA of $6,561 million, excess cash of $12,944 million, $12,541 million of debt, and 1,473.2 million shares outstanding.
a. Using the average enterprise value to EBITDA multiple from the table here,, estimate Nike's share price.
b. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples in the table above?
a. Using the average enterprise value to EBITDA multiple in the table, estimate Nike's share price.
Nike's share price for this case will be $ 52.78. (Round to the nearest cent.)
b. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples in the table?
The highest price will be $106.27. (Round to the nearest cent.)
Data table
TABLE 10.1
Stock Prices and
Multiples for the
Footwear Industry
(excluding Nike), July
2022
Name
Nike, Inc.
Adidas AG
Under Armour
Puma AG
Skechers U.S.A.
Wolverine World Wide
Steven Madden, Ltd.
Rocky Brands,…
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity.
You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant).
Based on the DCF approach, what is the cost of common from retained earnings? Please show formula and answer
please help me answer and analyze the following
Chapter 9 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CCCh. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CCCh. 9.3 - Prob. 3CCCh. 9.4 - Prob. 1CCCh. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.
Ch. 9.5 - Prob. 2CCCh. 9 - Assume Evco, Inc., has a current price of 50 and...Ch. 9 - Anle corporation has a current price of 20, is...Ch. 9 - Suppose Acap Corporation will pay a dividend of...Ch. 9 - Prob. 4PCh. 9 - NoGrowth Corporation currently pays a dividend of...Ch. 9 - Summit Systems will pay a dividend of 1.50 this...Ch. 9 - Prob. 7PCh. 9 - Canadian-based mining company EI Dorado Gold (EGO)...Ch. 9 - In 2006 and 2007, Kenneth Cole Productions (KCP)...Ch. 9 - DFB, Inc., expects earnings at the end of this...Ch. 9 - Cooperton Mining just announced it will cut its...Ch. 9 - Procter and Gamble (PG) paid an annual dividend of...Ch. 9 - Colgate-Palmolive Company has just paid an annual...Ch. 9 - Prob. 14PCh. 9 - Halliford Corporation expects to have earnings...Ch. 9 - Prob. 16PCh. 9 - Maynard Steel plans to pay a dividend of 3 this...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Suppose that In January 2006, Kenneth Cole...Ch. 9 - In addition to footwear, Kenneth Cole Productions...Ch. 9 - You read in the paper that Summit Systems from...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Q20arrow_forwardSolvearrow_forwardIf we know that a firm has a net profit margin of 4.5 % total asset turnover of 0.65, and a financial leverage multiplier of 1.47, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity?arrow_forward
- A) For a listed company of ABC, total book value of assets is 40 million, total market value of current assets is 20 million; total market value of fixed assets is 25 million, total current & non-current liabilities is 17.5 million, & total retained earning is 4.5 million. Total number of shares of the company is 2.5 million. Determine Current Price per share. B) How should we consider investment decision by comparing between market price and hook value of the security?arrow_forwardIf we know that a firm has a net profit margin of 4.3%, total asset turnover of 0.77, and a financial leverage multiplier of 1.37, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity? The firm's ROE is %. (Round to two decimal places.) What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity? (Select from the drop-down menus.) Observe the modified DuPont formula (see) and notice that each component can be compared with industry standards to assess the firm's performance. Therefore, the advantage of using the Dupont system is that ROE is broken into three distinct components. Starting at the right we see how has increased assets over the owners' original equity. Next, moving to the left, we see how efficiently the firm used its sales. to…arrow_forwardA company has a reported net income of RM12 million and 60million shares outstanding.a) Estimate the stock’s market price if the price earning (P/E)ratio is 14.0b) What is the company’s value by market capitalization?arrow_forward
- As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? 10.69% 11.25% 11.84% 12.43% 13.05%arrow_forwardAssume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.80; P0 = $32.50; and g = 8.00% (constant). What is the cost of equity from retained earnings based on the DCF approach?arrow_forwardThe following information relates to three companies in the same industry Latest Earnings Dividends Company market price per share per share A $ 35 $11 $0 B $40 $5 $4 C $ 90 $10 $6 Required: Explain and calculate the price -earnings and dividend yield ratios. On the basis of only the foregoing information, which company represents the most attractive investment opportunity to you? Explain.arrow_forward
- O'Brien Inc. has the following data: r RF=5.00%; RP M=6.00%; and b=1.10. What is the firm's cost of equity from retained earnings based on the CAPM? A. 11.83% B. 13.22% C. 11.25% D. 8.93% E. 11.60%arrow_forwardNeed answer pleasearrow_forwardAssume that company A is similar in terms of industry and other characteristics to firms B, C, and D. If you are using the average P/E ratio of the comparable firms, what should the price of Stock A be if it's expected earnings are $2.25 per share? Stock Stock B Stock C Stock D $18.93 $18.98 $60.77 $60.95 Price per share $37.22 $56.92 $421.34 Earnings per share $2.05 $2.96 $1.09 AVERAGE P/E Ratioarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Earnings per share (EPS), basic and diluted; Author: Bionic Turtle;https://www.youtube.com/watch?v=i2IJTpvZmH4;License: Standard Youtube License