Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answer THREE questions: a) Salamander Corporation has just announced a 1.50 per share dividend for the upcomingyear (with the company having 2 million shares outstanding).

image text in transcribed

Answer THREE questions: a) Salamander Corporation has just announced a 1.50 per share dividend for the upcomingyear (with the company having 2 million shares outstanding). The board has also announced that both sales and targets are looking positive and that they expect dividends to grow at a rate of 5% per year indefinitely. The stock of Salamander Corporation has a beta of 0.8 While the expected market return and risk free rates are 22% and 5% respectively The company's accountant also estimate that with further investment, the future cash flows of the company are to be as follows (2014 is termed year zero) 2014 6.4 mil 2015 7.2 mil 2016 7.5 mil 2017 2018-2030 E8.2 mil 8.5 mil p.a i) Calculate the return Salamander Corporation can expect from its stock. (2 %) i) Determine the value of the share in Salamander using the dividend discount model (5 %) ii) Determine the value of a share in Salamander using the discounted (10 %) iv) Given that the industry average P/E ratio is 5 and its eamings' figure is (3 %) cash flow method 6 millions, calculate the value of a Salamander share b) Compare and contrast the altenative approaches of fundamental analysis and technical analysis in assessing the prospects of a future investment opportunity. Your answer should include a(-) relevant example(s) of each methodology (13% %)

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

Step: 3

blur-text-image

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

Multinational Business Finance

Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

6th Edition

0201538997, 978-0201538991

More Books

Students also viewed these Finance questions