Problem 8-19 P/E Model and Cash Flow Valuation (LG8-5, LG8-7) Suppose that a firm's recent earnings per share and dividend per share are $3.30 and $2.30, respectively. Both are expected to grow at 9 percent. However, the firm's current P/E ratio of 32 seems high for this growth rate. The P/E ratio is expected to fall to 28 within five years. Compute the dividends over the next five years. Compute the value of this stock in five years. Calculate the present value of these cash flows using an 11 percent discount rate. Complete this question by entering your answers in the tabs below. Dividends Stock price Present value Calculate the present value of these cash flows using an 11 percent discount rate. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Present value < Stock price Present value >

8. Constant-growth DCF model (S4.4) Company Z's earnings and dividends per share are expected to grow indefinitely by 5% a year. If next year's dividend is $10 and the cost of equity is 8%, what is the current stock price?

Chapter 12, Question 10b: You need to estimate the equity cost of capital for XYZ Corp. You have the following data available regarding past returns: Year Risk-free Return 2007 3% 2008 1% Market Return XYZ Return 6% 10% -37% -45% Part B Estimate XYZ's beta (Hint: You'd better compute the market's and XYZ's excess returns for each year to proceed) beta = 1.17 beta 1.35 beta = 1.11 Obeta = 1.29

Give typing answer with explanation and conclusion     A company is expected to maintain its dividend payout ratio of 70% in the long term. The earnings per share of the company are expected to be $1.575 next year. Earnings are expected to grow at a constant rate of 5% per year. The current risk-free rate is 1%, the implied equity risk premium is 7.0%, and the estimated beta of the firm is 2.10. If the firm is currently trading in the market at a P/E of 13.5, which of the following statements is correct   A) firm correctly priced B) firm overvalued C) firm undervalued

3. A rapidly growing firm is currently paying a dividend of $2.95. The dividend growth rate is expected to be 8% for the next 3 years, 6% for the following 2 years, and 4% annually thereafter. The expected return on the market is 10%, the risk-free rate is 5% and the firm's Beta is 1.20. MULTIPLE GROWTH RATE SCENARIOS EXERCISE 6 CHAPTER 3 a. Calculate the estimated price (intrinsic value) for a share of this firm's stock. b. Use Goal Seek to determine what the current dividend would need to be to yield an estimated price (intrinsic value) of $70.

5. The firm's expected year-end dividend is D1 = P 1.60, its required return is r, =11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is the firm's expected stock price in 7 years, i.e., what is P? a. P41.37 d. P43.44 с. Р 37.52 f. P43.56 b. Р39.40 e. P45.61 6. The firm just paid a dividend of Do =P 1.32. Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value? с. Р43.75 f. P 44.87 a. P41.59 d. P 46.87 b. Р42.65 e. P45.99

Consider the table given below to answer the following question. The long-run growth rate is projected at 7% and discount rate is 10%. Year Asset value Earnings Net investment Free cash flow (FF) Return on equity (ROE) Asset growth rate Earnings growth hate 2 11.00 12.43 14.05 15.87 17.46 19.20 21.13 22.60 1.43 1.43 1.62 1.62 з 1.83 1.83 5 7 8 9 10 24.19 25.88 2.06 2.27 2.40 2.54 2.60 2.18 2.33 1.59 1.75 1.92 1.48 1.58 1.69 1.81 0.48 0.52 0.48 1.06 1.02 0.48 0.52 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.13 0.125 0.12 0.115 0.09 0.09 0.10 0.10 0.13 0.10 0.07 0.07 0.07 0.07 0.10 0.06 0.06 0.03 --0.16 0.07 Assuming that competition drives down profitability (on existing assets as well as new investment) to 12.5% in year 6, 12% in year 7, 11.5% in year 8, and 9% in year 9 and all later years. What is the value of the concatenator business? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million

Question: Hart Enterprises recently paid a dividend of $1.25. It expects to have non constant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%. a. How far away is the terminal, or horizon, date? b. What is the firm's horizon, or terminal, value? c. What is the firm's intrinsic value today?

NONCONSTANT GROWTH VALUATION Hart Enterprises recently paid a dividend, D0, of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm’s required return is 10%. How far away is the horizon date? What is the firm’s horizon, or continuing, value? What is the firm’s intrinsic value today, ˆP0

7. In future periods, YZX Inc. is expected to maintain a dividend payout 40%, a net profit margin of 4.6%, a total asset turnover of 2.2, and an equity multiplier of 1.35. What is YZX's projected sustainable growth rate? 5.46% 8.20% 8.55% 9.00%