stock/total no. of common stock =60‚000‚000/2‚500‚000 =$24 per share b) P/E ratio = price / earnings = 40/6.25 = 6.4 times c) 1) current required return = Rf + β (Rm – Rf ) = 6% +1.1(8.8 - 6) =9.08% Note: beta is assumed as there is no information of beta in the case study. 2) New required return = Rf + β (Rm - Rf ) = 6% + 1.1 (10-6.6) = 9.74% d) Ke =D1+ G Po 9.74 % = 4 x100+ 0 Po Po = $41.07 e) 1)Ke=D1+ G Po 9.74 % = 4.24 x100+ 6% Po Po=
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App13A_SW_Brigham_778322_R2 12/24/02 5:14 AM Page 13A-1 13A ILLUSTRATION OF THE THREE DIVIDEND POLICY THEORIES Figure 13A-1 illustrates the three alternative dividend policy theories: (1) Miller and Modigliani’s dividend irrelevance theory‚ (2) Gordon and Lintner’s bird-in-thehand theory‚ and (3) the tax preference theory. To understand the three theories‚ consider the case of Hardin Electronics‚ which has from its inception plowed all earnings back into the business and thus has never paid
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Financial Appraisal 1.0 Analysis This report provides an analysis of the performance of ITE Group over three consecutive years (2007-2009)‚ using various financial ratios; for the benefit of potential shareholders‚ lenders or suppliers. The report also indicates how non-financial performance indicators can help an organisation measure performance. This report will also look into the net present value method of appraisal‚ and explain its advantages and disadvantages. 2.0 Main Content The
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4% 21.6% Return on Assets 14.0% 16.6% 13.2% 17.1% Gross Profit Margin 58.8% 61.3% 58.2% 59.0% Profit Margin 4.9% 5.6% 4.8% 6.2% Net Profit Margin 3.8% 4.4% 3.3% 4.6% Detailed calculation on Appendix 2 (a) (b) Ratios 2012 2011 2010 2009 Return on Equity 17.3% 20.6% 15.4% 21.6% Return on Assets 14.0% 16.6% 13.2% 17.1% Gross Profit Margin 58.8% 61.3% 58.2% 59.0% Profit Margin 4.9% 5.6% 4.8% 6.2% Net Profit Margin 3.8% 4.4% 3.3% 4.6%
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1. (45 points) Calculate the value of Carborundum (on an aggregate and per share basis) using both the Free Cash Flow to Capital (FCFcap) and Free Cash Flow to Equity (FCFeq) methods. Use the following assumptions: Note: Rf=5.6%; MRP=8.8%‚ Carborundum’s levered beta (prior to deal)=1.16 FCFeq=Net Income + Non Cash Deductions-Capital Expenditures-Change in Net Working Capital-Debt Repayment+ Debt Issuances + Miscellaneous Extras Answer: Value of Kennecott using FCFcap is: $53.8 Value of Kennecott
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Corporate Finance (Berk/DeMarzo) Chapter 9 - Valuing Stocks 9.1 Stock Prices‚ Returns‚ and the Investment Horizon 1) Which of the following statements is false? A) There are two potential sources of cash flows from owning a stock. B) An investor will be willing to pay a price today for a share of stock up to the point that this transaction has a zero NPV. C) An investor might generate cash by choosing to sell the shares at some future date. D) Because the cash flows from stock are known with certainty
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SOLUTIONS Financial Management Seminar + Homework‚ Week 5 1. Starware Software was founded last year to develop software for gaming applications. Initially‚ the founder invested $800‚000 and received 8 million shares of stock. Starware now needs to raise a second round of capital‚ and it has identified an interested venture capitalist. This venture capitalist will invest $1 million and wants to own 20% of the company after the investment is completed. a. How many shares must the venture capitalist
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lifestyle products 7 7. Comparison between Osim and its competitors 8 8. Osim Financials 8 8.1 Company’s Financial Ratios 8 8.2 Market Prospects 9 8.2.1 Osim on its own 9 8.2.2 Osim vs. Selected peers (VGO‚ Best World‚ Ogawa‚ Jacks) 9 8.2.3 Osim vs. STI 10 8.3 Projected Performance 10 9. Conclusion 11 Appendix A 12 Appendix B 16 Appendix C 19 Appendix D 24 Appendix E 25 Appendix F 26 1. Introduction to Osim International Osim International Ltd. (Osim) is a Singapore listed company;
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PUNJAB NATIONAL BANK COMPANY PROFILE With more than 119 years of strong existence and over 6000 branches including 5 overseas branches‚ 6460 ATMs‚ 5047 Business Correspondents and 2165 Ultra Small Branches‚ Punjab National Bank is serving more than 82 million esteemed customers. PNB‚ being one of the largest nationalized banks‚ has continued to provide prudent and trustworthy banking services to its customers. The Bank enjoys strong fundamentals‚ large franchise value and good brand image. To
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etc. 4. Financial analysis of the company‚ which involves analyzing the financial statements like balance sheets‚ income statements‚ cash flows and ratios. 5. Valuation‚ which attempts to find the intrinsic value of the securities of the company. The approach to fundamental analysis is often referred to as E-I-C Approach. The E-I-C denotes the three parts of the fundamental analysis. The three distinctive parts of fundamental analysis are: 1. Economic Analysis 2. Industry
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