Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume you want to evaluate the stock value of JB Hi - Fi Ltd . ( ASX: JBH . AX ) using the Dividend Discount

Assume you want to evaluate the stock value of JB Hi-Fi Ltd.(ASX: JBH.AX) using the Dividend Discount Model. You will need to find information on dividends, the discount rate, and growth rate(s). Assuming you have access to JB Hi-Fi's information from the financial year 2018 to the financial year 2023(i.e.,30th June 2023). Below are several tasks for you to complete.
Q1. Find Dividends
Find the interim and final dividend per share (DPS) and the dividend payout ratio (DPR) of JB Hi-Fi Ltd. for the abovementioned period. List all the values.
In 2-3 sentences, discuss any patterns you observe in the DPS or DPR, and explain how you would use either or both metrics to perform the DDM analysis.
Q2. Find Growth rate(s)
Find the earnings per share (EPS) in the company's financial statement and calculate the EPS growth rate. Briefly describe your method.
Calculate the sustainable growth rate () and briefly describe your method.
Compare the EPS growth rate with the sustainable growth rate, and in 2-3 sentences, discuss which one you would prefer for evaluating JB Hi-Fi and why.
Q3. Find discount rate
In 2-3 sentences, discuss how you would estimate the discount rate. How would you find the necessary information to complete this calculation?
Q4. Apply the DDM
Based on your findings from questions 1-3 and your understanding of JB Hi-Fi's financial performance, which DDM would you use for evaluating JB Hi-Fi: a constant DDM, constant growth DDM, or a multi-stage DDM? Justify your choice in 2-3 sentences.

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

Personal Financial Planning

Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley

13th edition

1111971633, 978-1111971632

More Books

Students also viewed these Finance questions

Question

=+a) What kind of design or study is this?

Answered: 1 week ago