Chapter 13 Practice Set: 1. Consider the following information. Assume it is currently Jan 1, 2018: Jan 1, 2017 Commmon Stock Equity = $ 100,000,000 Jan 1, 2018 Common Stock Equity $110,500,000. 2017 NIAT $15,000,000. Dividends $4,500,000. #C ommon Shares 5.00 2016 EPS$3.00) 0.000. (use to determine per share basis. Example: Your expect the growth in earnings and div. payout ratio to be maintained indefinitely llowing market information is available. The company has a Beta 1.2. Currently the stock trades at $50 Economic forecasts suggest the broad market should return 11% for foreseeable future and the current T-bill rate is 3%. Questions: 7 a) What is the intrinsic value of the company's stock? Fundamental V Do 1+g) /(k-g) 7.35 Steps: Find ROE over 2017 $15,000,000? Find DPS/EPS and plowback Find g or [ROE * (1-DPS/EPS)] Find Req. Ret using SML Find Value V [90*(1?)]/(.126-?)- (note how k .126 was computed) b) What is the company's PVGO? $47.35- Ei /.126? c) Compute both the trailing and forward PE ratios. g this security (compare fundamental value to current price)? Chapter 13 Practice Set: 1. Consider the following information. Assume it is currently Jan 1, 2018: Jan 1, 2017 Commmon Stock Equity = $ 100,000,000 Jan 1, 2018 Common Stock Equity $110,500,000. 2017 NIAT $15,000,000. Dividends $4,500,000. #C ommon Shares 5.00 2016 EPS$3.00) 0.000. (use to determine per share basis. Example: Your expect the growth in earnings and div. payout ratio to be maintained indefinitely llowing market information is available. The company has a Beta 1.2. Currently the stock trades at $50 Economic forecasts suggest the broad market should return 11% for foreseeable future and the current T-bill rate is 3%. Questions: 7 a) What is the intrinsic value of the company's stock? Fundamental V Do 1+g) /(k-g) 7.35 Steps: Find ROE over 2017 $15,000,000? Find DPS/EPS and plowback Find g or [ROE * (1-DPS/EPS)] Find Req. Ret using SML Find Value V [90*(1?)]/(.126-?)- (note how k .126 was computed) b) What is the company's PVGO? $47.35- Ei /.126? c) Compute both the trailing and forward PE ratios. g this security (compare fundamental value to current price)