Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

d) Kosciuszko's financial year runs to thia end of April. It's cost of equity capital is 7.5%. Common shareholder equity at 30 April 2021 was

d) Kosciuszko's financial year runs to thia end of April. It's cost of equity capital is 7.5%. Common shareholder equity at 30 April 2021 was equal to AUD 200 million. The explicit forecasting period ends in April 2025 and abnormal earnings are expected to decline by 8% per annum thereafter. Abnormal earnings in the year to April 2025 are expected to equal AUD 44 million and the present value of abnormal earnings for the whole of the explicit forecasting period is expected to equal AUD 164 million. (i) Calculate the predicted abnormal earnings in the year to April 2029, to the nearest AUD 100,000. (2 marks) (in) Determine the intrinsic value of Kosciuszko's equity, to the nearest AUD million. (5 marks).

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

Derivatives And Internal Models

Authors: H. Deutsch

4th Edition

1349307661, 9781349307661

More Books

Students also viewed these Finance questions