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    Jacklewv75's Avatar
    Jacklewv75 Posts: 6, Reputation: 1
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    #1

    Aug 5, 2012, 08:30 AM
    Equity Pricing Exercise
    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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    Jacklewv75 Posts: 6, Reputation: 1
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    #2

    Aug 5, 2012, 08:31 AM
    Equity Pricing Exercise
    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%.
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    Jacklewv75 Posts: 6, Reputation: 1
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    #3

    Aug 5, 2012, 08:32 AM
    Equity Pricing Exercise
    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?
    Jacklewv75's Avatar
    Jacklewv75 Posts: 6, Reputation: 1
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    #4

    Aug 5, 2012, 08:33 AM
    Equity Pricing Exercise
    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?
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    Jacklewv75 Posts: 6, Reputation: 1
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    #5

    Aug 5, 2012, 08:34 AM
    Equity Pricing Exercise
    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?
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    Jacklewv75 Posts: 6, Reputation: 1
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    #6

    Aug 5, 2012, 08:34 AM
    Equity Pricing Exercise
    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?
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    Curlyben Posts: 18,514, Reputation: 1860
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    #7

    Aug 5, 2012, 09:01 AM
    While we are happy to HELP, we will not do all of the work for you.
    Please show us where you are having difficulties and what you have already done.
    cdavies3's Avatar
    cdavies3 Posts: 3, Reputation: 1
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    #8

    Aug 8, 2012, 06:30 PM
    Quote Originally Posted by Jacklewv75 View Post
    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?
    60% 1-60% = 40%= Retention ratio
    0.18 X 0.40= 0.07= 7.0%
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    cdavies3 Posts: 3, Reputation: 1
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    #9

    Aug 8, 2012, 07:29 PM
    I need help!
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    cdavies3 Posts: 3, Reputation: 1
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    #10

    Aug 8, 2012, 07:30 PM
    Quote Originally Posted by Jacklewv75 View Post
    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?
    Nee help!
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