Considering the annualized holding period return, at what future price would the alpha of Deere be basically zero? Assume the required return is 10%. Use 2008 as the current year, the sum of the dividends is $3.6463, and a three year time horizon.
A. price = $52.92
B. price = $49.27
C. price = $48.78
D. price = $45.63
Payable 4516 4738 Debt Due 339 275 1341 Other 189 618 119 Current Lieb 114255 15409 6198 ANNUAL RATES Past Past Est'd 06-0B of change (pers 10 yrs 5 Yrs. to M2714 Sales 8.5% 15.5% 9.5% Cash Flow 7.55 26.5% 10.598 Earnings 8.0% 36.5% 11.596 Dividends 8.5% 16.0% 17.096 Book Value 7.0% 15.5% 18.09 ROPER INDS. NYSE-ROP RECENT PE PRICE 43.88 R.TO 16.26 Traiing: 143 RELATIVE Median: 21.0 / PIE RATIO 1.25 DIVO YLD 0.8% VALUE LINE 3 N28690 CAPITAL STRUCTURE as of 12/31/08 Total Debt $12675 mill. Due in 5 Yrs $1266.6 mil. LT Debt $1033.7 mill. LT Interest $51.5 mill. (Total interest covered: 9.1x) (34% of Capital) Price TIMELINESS 2 Raided Y180! SAFETY TECHNICAL 3 Lowest 125.00 BETA 1.10 (100 Martel 201214 PROJECTIONS Ann' Total Gain Return High 75 (470%) 15% Low 50 (+15% 4% Insider Decisions MJ J A S O N D to Buy OOOOOOOOO Ons 11002 O O O O to sell 2 101 21000 Institutional Decisions 202008 192010 40200 to Buy 159 150 159 to Sed 144 100 100 Hd 100 88034 87042 87110 2008 2009 2010 PVALUE LINE PUB, NC 12-14 25.71 24.25 24,50 Sales per sh 28.70 4.34 4.10 230 "Cash Flow persh 5.45 3.05 270 280 Earnings per sh AB 3.80 130 134 135 Divds Decid per shC .50 35 135 Cap Spending per sh 2233 25.25 28.25 Book Value per she 38.50 89.722.75 91.75 Common Shs Oulst 95.00 180 Bold figures are Avg Ann' PE Ratio 7605 1.09 Value Cine Relative P/E Ratio 1.10 5% estinares Avg Ann's Div'd Yield .8% Leases, Uncapitalized Annual rentals $242 mil. No Defined Benefit Pension Plan Preferred Stock None Common Stock 89,765,578 shares as of 2/20/09 MARKET CAP: $3.9 billion (Mid Cap) CURRENT POSITION 2006 2007 12/31/08 SMILL Cash Assets 69.5 308.8 178.1 Receivables 324,5 359.8 376.9 Inventory (LIFO) 168.3 174.1 185.9 Other 652 108.4 117.4 Current Assets 6275 951.1 8583 Accts Payable 96.1 115.8 121.8 Debt Due 2999 331.1 233,8 Other 191.7 2206 263.6 Current Liab. 5877 6675 6192 ANNUAL RATES Past Past Est d '06-'08 of change persh) 10 Yrs. 5 Yrs. to 12.14 Sales 16.5% 19.0% 4.0% "Cash Flow 17.5% 25.0% 6.3% Earnings 17.0% 21.5% Dividends 10.5% 10.5% 11.0% Book Value 21.5% 24.0% 11.5% 6.596 maining Time: 18 minutes, 00 seconds. stion Completion Status: DEERE & CO. NYSE-DE RECENT PRICE 37.02 TO 10.6(leder : 18 ) RATE 0.82 DIVD YLD VALUE CAPITAL STRUCTURE as of 1/31/09 Total Debt $3375 mill. Due in 5 Yrs $1650 mil LT Debt $2034 mill LT Interest $150 mill Exd unconsol. debt of subs: LT, 314541 mill, ST, $7992 mill. (Total interest coverage: 16.5% Teamed: 22.0x) (24% of Cap 4.70 High 119 13302 TIMEUNESS 3 Rabad/170 SAFETY 2 Raid 4240 TECHNICAL 3 Rated 121908 BETA 1.40 0.00 Mah 2012-14 PROJECTIONS Ann'l Total Price Gain Return 210% LON Insider Decisions M J J A S O N D to By 0 0 0 0 0 0 0 0 0 Options 100 0 0 0 0 0 0 to sell 1 0 0 0 0 0 0 0 0 Institutional Decisions 202008 392000 200 fo Buy 361 302 365 to Srl 383 417 337 HOM328603 311528 304450 2008 2009 2010 VALUELINE PUB, INCI 12-14 61.10 57.30 60.00 Sales per sh 20.00 6.01 4.90 5.00 "Cash Flow" per sh 8.40 3.50 4.00 Earnings per sh 6.75 1.08 1.12 1.12 Divds Deci'd per sh. 1.40 1.85 105 2.75 Cap Spending persh 7.55 15.47 17.25 18.90 Book Value per sho 43.00 472220210.000100 Common Shs Out B75100 16. Bold Forware Avg Anni PE Ratio 750 1.01 Valud Line Relative PIE Ratio 1.00 1.4% ess Avg Anni Dvd Yield 1.4% Leases, Uncapitalized Annual rentals $165 mil Pension Assets-10/08 $7.8 bill Oblig. $7.1 bil Pld Stock None Common Stock 422,672,599 shs. Market Cap: $15.6 billion (Large Cap) CURRENT POSITION 1,07 1/08 1/09 SMILL Cash Assets 1199 1199 1181 Receivables 949 1003 860 Inventory (LIFO) 2484 3289 3837 Other 1815 1960 962 Current Assets 6447 7451 16840 Accts Payable 3727 4516 4738 Debt Due 339 275 1341 Other 189 618 119 Current Liab 4255115409 6198 ANNUAL RATES Past Past Est'd 06-08 of change (per shi 10 Yrs. 5 Yrs. to 12/14 Sales 85% 15.5% *Cash Flow 7.5% 26.5% 10.39 Earnings 80% 38.5% 11.596 Dividends 8.5% 16.0% 7.096 Book Value 7.0% 15.5% 18.0% 9.595 Payable 4516 4738 Debt Due 339 275 1341 Other 189 618 119 Current Lieb 114255 15409 6198 ANNUAL RATES Past Past Est'd 06-0B of change (pers 10 yrs 5 Yrs. to M2714 Sales 8.5% 15.5% 9.5% Cash Flow 7.55 26.5% 10.598 Earnings 8.0% 36.5% 11.596 Dividends 8.5% 16.0% 17.096 Book Value 7.0% 15.5% 18.09 ROPER INDS. NYSE-ROP RECENT PE PRICE 43.88 R.TO 16.26 Traiing: 143 RELATIVE Median: 21.0 / PIE RATIO 1.25 DIVO YLD 0.8% VALUE LINE 3 N28690 CAPITAL STRUCTURE as of 12/31/08 Total Debt $12675 mill. Due in 5 Yrs $1266.6 mil. LT Debt $1033.7 mill. LT Interest $51.5 mill. (Total interest covered: 9.1x) (34% of Capital) Price TIMELINESS 2 Raided Y180! SAFETY TECHNICAL 3 Lowest 125.00 BETA 1.10 (100 Martel 201214 PROJECTIONS Ann' Total Gain Return High 75 (470%) 15% Low 50 (+15% 4% Insider Decisions MJ J A S O N D to Buy OOOOOOOOO Ons 11002 O O O O to sell 2 101 21000 Institutional Decisions 202008 192010 40200 to Buy 159 150 159 to Sed 144 100 100 Hd 100 88034 87042 87110 2008 2009 2010 PVALUE LINE PUB, NC 12-14 25.71 24.25 24,50 Sales per sh 28.70 4.34 4.10 230 "Cash Flow persh 5.45 3.05 270 280 Earnings per sh AB 3.80 130 134 135 Divds Decid per shC .50 35 135 Cap Spending per sh 2233 25.25 28.25 Book Value per she 38.50 89.722.75 91.75 Common Shs Oulst 95.00 180 Bold figures are Avg Ann' PE Ratio 7605 1.09 Value Cine Relative P/E Ratio 1.10 5% estinares Avg Ann's Div'd Yield .8% Leases, Uncapitalized Annual rentals $242 mil. No Defined Benefit Pension Plan Preferred Stock None Common Stock 89,765,578 shares as of 2/20/09 MARKET CAP: $3.9 billion (Mid Cap) CURRENT POSITION 2006 2007 12/31/08 SMILL Cash Assets 69.5 308.8 178.1 Receivables 324,5 359.8 376.9 Inventory (LIFO) 168.3 174.1 185.9 Other 652 108.4 117.4 Current Assets 6275 951.1 8583 Accts Payable 96.1 115.8 121.8 Debt Due 2999 331.1 233,8 Other 191.7 2206 263.6 Current Liab. 5877 6675 6192 ANNUAL RATES Past Past Est d '06-'08 of change persh) 10 Yrs. 5 Yrs. to 12.14 Sales 16.5% 19.0% 4.0% "Cash Flow 17.5% 25.0% 6.3% Earnings 17.0% 21.5% Dividends 10.5% 10.5% 11.0% Book Value 21.5% 24.0% 11.5% 6.596 maining Time: 18 minutes, 00 seconds. stion Completion Status: DEERE & CO. NYSE-DE RECENT PRICE 37.02 TO 10.6(leder : 18 ) RATE 0.82 DIVD YLD VALUE CAPITAL STRUCTURE as of 1/31/09 Total Debt $3375 mill. Due in 5 Yrs $1650 mil LT Debt $2034 mill LT Interest $150 mill Exd unconsol. debt of subs: LT, 314541 mill, ST, $7992 mill. (Total interest coverage: 16.5% Teamed: 22.0x) (24% of Cap 4.70 High 119 13302 TIMEUNESS 3 Rabad/170 SAFETY 2 Raid 4240 TECHNICAL 3 Rated 121908 BETA 1.40 0.00 Mah 2012-14 PROJECTIONS Ann'l Total Price Gain Return 210% LON Insider Decisions M J J A S O N D to By 0 0 0 0 0 0 0 0 0 Options 100 0 0 0 0 0 0 to sell 1 0 0 0 0 0 0 0 0 Institutional Decisions 202008 392000 200 fo Buy 361 302 365 to Srl 383 417 337 HOM328603 311528 304450 2008 2009 2010 VALUELINE PUB, INCI 12-14 61.10 57.30 60.00 Sales per sh 20.00 6.01 4.90 5.00 "Cash Flow" per sh 8.40 3.50 4.00 Earnings per sh 6.75 1.08 1.12 1.12 Divds Deci'd per sh. 1.40 1.85 105 2.75 Cap Spending persh 7.55 15.47 17.25 18.90 Book Value per sho 43.00 472220210.000100 Common Shs Out B75100 16. Bold Forware Avg Anni PE Ratio 750 1.01 Valud Line Relative PIE Ratio 1.00 1.4% ess Avg Anni Dvd Yield 1.4% Leases, Uncapitalized Annual rentals $165 mil Pension Assets-10/08 $7.8 bill Oblig. $7.1 bil Pld Stock None Common Stock 422,672,599 shs. Market Cap: $15.6 billion (Large Cap) CURRENT POSITION 1,07 1/08 1/09 SMILL Cash Assets 1199 1199 1181 Receivables 949 1003 860 Inventory (LIFO) 2484 3289 3837 Other 1815 1960 962 Current Assets 6447 7451 16840 Accts Payable 3727 4516 4738 Debt Due 339 275 1341 Other 189 618 119 Current Liab 4255115409 6198 ANNUAL RATES Past Past Est'd 06-08 of change (per shi 10 Yrs. 5 Yrs. to 12/14 Sales 85% 15.5% *Cash Flow 7.5% 26.5% 10.39 Earnings 80% 38.5% 11.596 Dividends 8.5% 16.0% 7.096 Book Value 7.0% 15.5% 18.0% 9.595
