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Can someone help me doing this exercise on Equity pricing Financial Concepts Week5 Exercise9 Equity Pricing Name: Instructions Show work by showing the algebra in

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Can someone help me doing this exercise on Equity pricing

image text in transcribed Financial Concepts Week5 Exercise9 Equity Pricing Name: Instructions Show work by showing the algebra in the Excel cell(s) and any intermediate steps in the calculations. Leave all answers to TWO decimal places. Q1. Company A has projected net income per share for this year at $3.00 per share. It has traditionally paid out a dividend of 25% of its net income. Income and dividends have been growing at a constant rate (indefinitely) of 4% per year. The equity discount rate for this company is 10%. a) What is the projected dividend for next year? D1 = b) What is the current value of the stock using the Constant Growth Model of the Dividend Discount Model? monkey2 P0 = If from Question 1, having that projected EPS of $3.00, Company A decides to reduce its dividend rate to 20%, and expects that the growth rate will increase as a result of the higher retained earnings to 5% per year: a) What is the new projected dividend for next year? D1new = Q2. b) What is the new stock value? P0new = Q3. A separate company, Company B, has a ROE of 10%. a) What will be its estimated growth rate if it has a dividend payout ratio of 40%? g= b) If the company decreases the dividend payout ratio to 30%, what will be the new estimated growth rate? gnew = Q4. A separate third company, Company C, will have earnings per share of $5.00 this year. It pays a dividend equal to 40% of net income. It is expecting that income and dividends will grow by 25% next year and 20% the year after. In subsequent years, it is expecting to return to its historical constant growth rate of 5% per year. The relevant discount rate for this company is 10%. a) What are the projected level of dividends for years 1, 2 and 3. D1 = D2 = D3 = b) What is the value of the stock in year 2? P2 = c) What is the value of the stock today? [assume dividend D0 has been paid out]. P0 = Q5. Company D has EBITDA of $500 million. It has outstanding debt of $600 million. Its industry has typically displayed a Value/EBITDA ratio of between 8x and 10x EBITDA. If Company D has 100 million shares outstanding, what is the estimate of the per share value of this company? Low-end High-end Value/EBITDA ratio: 8 10 Per Share Value: Average Per Share Value = monkey2

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