Maurice Tutor

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Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 09 Aug 2017 My Price 11.00

Financial Concepts

Financial Concepts Equity Pricing Exercise Homework Exercise 9 1. Company A has projected net income per share for this year at $3.80 per share. It has traditionally paid out a dividend of 45% of its net income. Income and dividends have been growing at a rate of 8% per year. The equity discount rate for comparable companies is 13%. a. What is the projected dividend for next year? b. What is the current value of the stock using the Dividend Discount Model? 2. Company A decides to reduce its dividend rate to 40%, and expects that the growth rate will increase as a result of the higher retained earnings to 9% per year. a. What is the new projected dividend for next year? b. What is the new stock value? 3. Company B has a ROE of 18%. a. What will be its estimated growth rate if it has a dividend payout ratio of 60% ? b. If the company decreases the dividend payout ratio to 50%, what will be the new estimated growth rate? 4. Company C will have earnings per share of $5.00 this year. It pays a dividend equal to 35% of net income. It is expecting that income and dividends will grow by 25% next year and 20% the year after. Then it is expecting to return to its historical growth rate of 8% per year. The relevant discount rate is 15% a. What are the projected level of dividends for in years 1,2 and 3 i. D1 = ii. D2 = iii. D3 = b. What is the value of the stock in year 2? c. What is the value of the stock today? 5. Company D has EBITDA of $370 million. It has outstanding debt of $670 million. It is industry has typically displayed a Value /EBITDA ratio of between 5x and 6x EBITDA. If Company D has 20 million shares outstanding, what is the estimate of the per share value of the company?

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Maurice Tutor
(5)
Status NEW Posted 09 Aug 2017 05:08 PM My Price 11.00

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