Bundle: Fundamentals of Financial Management, Loose-leaf Version, 15th + MindTap Finance, 1 term (6 months) Printed Access Card
15th Edition
ISBN: 9781337817455
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 9, Problem 3TCL
Estimating Exxon Mobil Corporation's Intrinsic Stock Value
Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions.
In this chapter, we described the various factors that influence stock prices and the approaches that analysts use to estimate a stock’s intrinsic value. By comparing these intrinsic value estimates to the current price, an investor can assess whether it makes sense to buy or sell a particular stock. Stocks trading at a price far below their estimated intrinsic values may be good candidates for purchase, whereas stocks trading at prices far in excess of their intrinsic value may be good stocks to avoid or sell Although estimating a stock's intrinsic value is a complex exercise that requires reliable data and good judgment, we can use the Internet to find financial data in order to arrive at a quick "back-of-the- envelope" calculation of intrinsic value.
3. To provide a starting point for gauging a company's relative valuation, analysts often look at a company's price-to-earnings (P/E) ratio. Go to the website's summary quote or key statistics screen to see XOM's forward P/E ratio, which uses XOM's next 12-month estimate of earnings in the calculation, and to see its current P/E ratio. What are the firm’s forward and current P/E ratios?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please don't use Ai solution
Wildcat, Incorporated, has estimated sales (in millions) for the next four quarters as follows:
Q1
Q2
Q3
Sales $ 125 $ 145 $ 165
Q4
$ 195
Sales for the first quarter of the following year are projected at $140 million. Accounts receivable at the beginning of the year were
$55 million. Wildcat has a 45-day collection period.
Wildcat's purchases from suppliers in a quarter are equal to 45 percent of the next quarter's forecast sales, and suppliers are normally
paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $10 million per quarter.
Wildcat plans a major capital outlay in the second quarter of $81 million. Finally, the company started the year with a cash balance of
$70 million and wishes to maintain a $30 million minimum balance.
a. Complete the following cash budget for Wildcat, Incorporated.
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers in
millions,…
Please don't use Ai solution
Chapter 9 Solutions
Bundle: Fundamentals of Financial Management, Loose-leaf Version, 15th + MindTap Finance, 1 term (6 months) Printed Access Card
Ch. 9.A - For a stock to be in equilibrium, what two...Ch. 9.A - If a stock is not in equilibrium, explain how...Ch. 9.A - RATES OF RETURN AND EQUILIBRIUM Stock Cs beta...Ch. 9.A - EQUILIBRIUM STOCK PRICE The risk-free rate of...Ch. 9.A - BETA COEFFICIENTS Suppose Chance Chemical Companys...Ch. 9 - It is frequently stated that the one purpose of...Ch. 9 - Is the following equation correct for finding the...Ch. 9 - Prob. 3QCh. 9 - Two investors are evaluating GEs stock for...Ch. 9 - A bond that pays interest forever and has no...
Ch. 9 - Discuss the similarities and differences between...Ch. 9 - This chapter discusses the discounted dividend and...Ch. 9 - How do non-operating assets impact a firms...Ch. 9 - DPS CALCULATION Weston Corporation just paid a...Ch. 9 - CONSTANT GROWTH VALUATION Tresnan Brothers is...Ch. 9 - CONSTANT GROWTH VALUATION Holtzman Clothierss...Ch. 9 - NONCONSTANT GROWTH VALUATION Holt Enterprises...Ch. 9 - CORPORATE VALUATION Scampini Technologies is...Ch. 9 - PREFERRED STOCK VALUATION Farley Inc. has...Ch. 9 - Prob. 7PCh. 9 - PREFERRED STOCK VALUATION Earley Corporation...Ch. 9 - PREFERRED STOCK RETURNS Avondale Aeronautics has...Ch. 9 - Prob. 10PCh. 9 - Suppose you believe that the economy is just...Ch. 9 - VALUATION OF A CONSTANT GROWTH STOCK Investors...Ch. 9 - CONSTANT GROWTH You are considering an investment...Ch. 9 - NONCONSTANT GROWTH Computech Corporation is...Ch. 9 - CORPORATE VALUATION Dantzler Corporation is a...Ch. 9 - NONCONSTANT GROWTH Carnes Cosmetics Co.s stock...Ch. 9 - CONSTANT GROWTH Your broker offers to sell you...Ch. 9 - NONCONSTANT GROWTH STOCK VALUATION Taussig...Ch. 9 - Prob. 19PCh. 9 - CORPORATE VALUE MODEL Assume that today is...Ch. 9 - NONCONSTANT GROWTH Assume that it is now january...Ch. 9 - Comprehensive/Spreadsheet Problem NONCONSTANT...Ch. 9 - Prob. 23ICCh. 9 - Estimating Exxon Mobil Corporation's Intrinsic...Ch. 9 - Prob. 2TCLCh. 9 - Estimating Exxon Mobil Corporation's Intrinsic...Ch. 9 - Prob. 4TCLCh. 9 - Estimating Exxon Mobil Corporation's Intrinsic...Ch. 9 - Prob. 6TCLCh. 9 - Prob. 7TCLCh. 9 - Prob. 8TCLCh. 9 - Prob. 9TCLCh. 9 - Prob. 10TCL
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
- · What does a degree of financial leverage (DFL) of 2.0 indicate? O For every 1 percent change in its EBIT, the firm's EPS will change by 2 percent. O For every 1 percent change in its EBIT, the firm's sales will change by 2 percent. For every 1 percent change in its sales, the firm's EBIT will change by 2 percent. For every 1 percent change in its EPS, the firm's EBIT will change by 0.5 percent. ○ For every 1 percent change in its EPS, the firm's sales will change by 0.5 percent.arrow_forwardDon't used Ai solutionarrow_forwardDani Corporation has 3.4 million shares of common stock outstanding. The current share price is $84.50, and the book value per share is $8.75. The company also has two bond issues outstanding. The first bond issue has a face value of $71 million, a coupon rate of 5.1 percent, and sells for 95.5 percent of par. The second issue has a face value of $43 million, a coupon rate of 5.7 percent and sells for 104.5 percent of par. The first issue matures in 21 years, the second in 9 years. The most recent dividend was $3.98 a the dividend growth rate is 4.1 percent. Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues. Both bonds make semiannual payments. The tax rate is 21 percent. What is the company's cost of equity? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Cost of equity % What is the company's aftertax cost of debt? Note: Do not round intermediate…arrow_forward
- Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount rate is 10.9%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown here, which should it choose? (Note: dollar amounts are in thousands.) Based on the costs of each model, which should it choose? (Select the best choice below.) OA. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. OB. Gateway Tours should choose Old Reliable because it lasts longer. C. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. OD. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Model Year 0 Year 1 Year 2 Year 3 Old Reliable - $201 - $3.9 - $3.9 -$3.9 Year 4 -…arrow_forwardFabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Contract A NPV $1.98 million Use of Facility 100% B $1.01 million 57% C $1.49 million 43% Print Done - X ☑arrow_forwardExplain the difference between operating gearing and financial gearing. Identify one likely implication to a company with a high level of gearing.arrow_forward
- You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,100 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed here: (the equipment has an economic life of 5 years). If your discount rate is 6.5%, what should you do? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year 0 -$40,600 Year 1 -$2,100 Year 2 - $2,100 Year 3 Year 4 Year 5 - $2,100 - $2,100 - $2,100 Print Donearrow_forwardOrchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to forecast, the company has come up with the following estimates of the initial capital requirements and NPVs for the projects: Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project (all cost values are given in millions of dollars). a. Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these projects? b. Suppose that Orchid currently has 12 research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects? Data table D (Click on the following icon in order to copy its contents into a spreadsheet.) Project Number Initial Capital ($) Number of Research NPV ($) Scientists 10 15 15 IV 20 2343 10.1 19.0 22.0 25.0 V 30 12 60.2 Print Done Xarrow_forwardYou are choosing between two projects. The cash flows for the projects are given in the following table ($ million): E a. What are the IRRS of the two projects? b. If your discount rate is 4.8%, what are the NPVS of the two projects? c. Why do IRR and NPV rank the two projects differently? a. What are the IRRS of the two projects? The IRR for project A is %. (Round to one decimal place.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Project AB Year 0 $48 Year 1 $26 $99 $18 Year 2 $19 $38 Print Done Year 3 Year 4 $19 $17 $48 $59 -Xarrow_forward
- Don't used Ai solutionarrow_forwardPlease don't use Ai solutionarrow_forwardPlease don't use Ai solution An appraisal was requested on an office building that contains 100,576 square feet. The appraiser found three sales to compare and gave Sales 1 and 3 most weight in final reconciliation. Sale 2 was given no weight. The subject was 10% superior to Sale 3 but Sale 1 was 15% superior to the subject. The subject was 25% superior to Sale 2. What is the net adjustment to Sale 3? -10%-15% +15%+10%arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781285867977Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Fundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals of Financial Management, Concise Edi...FinanceISBN:9781285065137Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781285867977
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Fundamentals Of Financial Management, Concise Edi...
Finance
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Fundamentals of Financial Management, Concise Edi...
Finance
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Efficient Market Hypothesis - EMH Explained Simply; Author: Learn to Invest - Investors Grow;https://www.youtube.com/watch?v=UTHvfI9awBk;License: Standard Youtube License