Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1) Given the information below for HooYah! Corporation, compute the expected share price at the end of 2011 using price ratio analysis. (Round your answer

1)

Given the information below for HooYah! Corporation, compute the expected share price at the end of 2011 using price ratio analysis. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Year 2005 2006 2007 2008 2009 2010
Price 21.00

57.50

129.00 206.00 96.00 26.50
EPS -5.00 -4.29 -1.70 -.55 .04 .05
CFPS -12.00 -9.50 -2.70 -.10 .33 .20
SPS 18.00 26.50 24.60 28.10 31.60 34.95

Share Price

P/E=

P/CF=

P/S=

2)

JJ Industries will pay a regular dividend of $0.85 per share for each of the next four years. At the end of the four years, the company will also pay out a $79 per share liquidating dividend, and the company will cease operations. If the discount rate is 9 percent, what is the current value of the companys stock? (Round your answer to 2 decimal places. Omit the "$" sign in your response.

Price $

4)

Joker stock has a sustainable growth rate of 12 percent, ROE of 16 percent, and dividends per share of $3. If the P/E ratio is 18.5, what is the value of a share of stock? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Share of stock $

5)

You are going to value Lauryns Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of 0.4, a tax rate of 40 percent, and net income last year of $41 million. Assume a risk-free rate of 5 percent and a market risk premium of 12 percent. Included in net income was a depreciation expense of $5.1 million. In addition, Lauryn paid out $7.5 million in capital expenditures. Assume the company's FCF is expected to grow at a rate of 4 percent into perpetuity. What is the value of the firm? (Enter your answer in millions. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Firm value $ million

8)Given the information below for StartUp.Com, compute the expected share price at the end of 2011 using price ratio analysis. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Year 2007 2008 2009 2010
Price N/A 80.12 107.32 116.18
EPS N/A -7.70 -.51 -4.04
CFPS N/A -11.20 -9.40 -4.93
SPS N/A 10.10 13.60 17.10

Share price $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance

Authors: Harvey S Rosen

6th Edition

0072374055, 978-0072374056

More Books

Students also viewed these Finance questions