Investment Analysis (FIN 670) Fall 2009 Homework 8 Instructions: please read carefully • • You should show your work how to get the answer for each calculation question to get full credit The due date is Tue Dec 15‚ 2009. Late homework will not be graded. Name(s): Student ID 1. A constant-growing stock just paid $2 dividend and has a current market price of $30. Determine the stock’s required rate of return if the company’s constant growth rate is 5%. a. 5% b. 7% c. 12%
Premium P/E ratio Dividend yield Financial ratios
OBJECTIVE: To find β‚ Value of Share and Weighted Average Cost of Capital (WACC) for TATA POWER CO. LTD. REFERENCE INDEX: Reference index used for β and other calculations is NSE INDEX. I have collected weekly data from 31/08/2005 to 30/08/2010. COST OF CAPITAL Cost of capital of the company has been calculated by using Weighted Average Cost of Capital (WACC) by assigning weights to cost of equity and cost of debt. COST OF EQUITY- CAPM model has been used to calculate the cost of equity
Premium Dividend yield Weighted average cost of capital Stock market
relatively low (+) (+) Question 2: Online auction industry driving forces: 1. The growth of the Internet during 1990s The Internet ganered widespread use as a part of daily life. 2. Changes in lifestyle. Increase in the business-to-consummer E-commerce Conclusion: Driving forces are collectively acting to cause the demand for the industry’s product to increase. Driving forces are acting to make competition more intense The combined
Premium Financial ratios Financial ratio P/E ratio
Financial Management Unit 15 Unit 15 Structure 15.1 Introduction 15.2 Traditional Approach 15.3 Dividend Relevance Model 15.3.1 15.3.2 Walter Model Gordon’s Dividend Capitalization Model Dividend Decision 15.4 Dividend Irrelevance Theory: Miller and Modigliani Model 15.5 Stability of Dividends 15.6 Forms of Dividends 15.7 Stock Split 15.8 Summary Terminal Questions Answers to SAQs and TQs 15.1 Introduction Dividends are that portion of a firm’s net earnings paid to the shareholders
Premium Dividend yield Stock market P/E ratio
The firm’s stocks are undervalued. According to the dividends‚ growth rate‚ and discount rate the share price should be $43.36 which is $8.11 higher than the current market price. If the repurchase of $1Million worth of shares occurs‚ the company’s Return on Equity would increase. This would happen since there is less shareholder’s equity in the company due to the lower amount of shares outstanding. Currently the company’s Return on Equity is better than Standard Auto and Allied Motors but worse
Premium Stock Dividend yield Financial ratio
subsidiaries (group). The author has made use eleven ratios to analyze the financial position of the company. The ratios that he has used are Return on Investment (ROI)‚ Return to shareholders‚ Return on Capital Employed (ROCE)‚ Earnings per share (EPS)‚ Price-Earnings Ratio (P/E)‚ Dividend yield‚ Dividend payout‚ Gearing ratio‚ Interest cover‚ Current ratio and Acid test ratio. The author was not able to use the gross profit ratio‚ net profit ratio and working capital turnover because since only JKH
Premium Financial ratios Generally Accepted Accounting Principles Dividend yield
take a company private. Explain what a leveraged buyout is and what risk it entails. Mergers and Other Forms of Corporate Restructuring © Pearson Education Limited 2004 Fundamentals of Financial Management‚ 12/e Created by: Gregory A. Kuhlemeyer‚ Ph.D. Carroll College‚ Waukesha‚ WI 23-1 23-2 Mergers and Other Forms of Corporate Restructuring Mergers and Other Forms of Corporate Restructuring Sources of Value Strategic Acquisitions
Premium Corporate finance Fundamental analysis Mergers and acquisitions
Case Study Summary (SAUDI STOCK MARKET) The purpose of this article is to illustrate a simple and easy method to identify undervalued stocks in Saudi Stock Market to enable the investors for making well informed and conscious investment decisions. Actually‚ Investing is the act of committing money or capital to an endeavour with the expectation of obtaining an additional income or profit. True investing doesn’t happen without some action on our part. A "real" investor does not simply throw his
Premium Stock market P/E ratio Stock
second half of 2008” Methodology: I have studied the annual reports of both Amlak Finance and Tamweel extensively for the past 2 years – (2007 & 2006). I understand both these companies are showing signs of positive growth. I have relied on ratio analysis to calculate and understand the numbers‚ at the same time I have looked at the vision and mission of these companies‚ the leadership and management initiatives for the future to come to a conclusion. From my study‚ I have eventually found
Premium Financial ratio Financial ratios 2008
asset pricing model (CAPM) was used to determine the appropriate required rate of return on Walm-Mart’s stock. The required rate of return for Wal-Mart is 7.01% * In following the concepts of the price/earnings (P/E) multiple approach‚ Wal-Mart’s intrinsic value based upon the P/E multiple approach is $55.03. Given the current stock price of Wal-mart of $53.48‚ this valuation would support that Wal-Mart’s stock is undervalued. *Several assumptions were made within the various valuation methods
Premium P/E ratio Dividend yield Financial ratios