Find the estimated growth rate by using the 2013 dividend per share ($1 24) and the 16 18 column estimate (2017) of $1 52, with an NPER of 4 years 20 3 ( 1 14 ta IM www 102 shares PCH is a good candidate for the DDM because of its very high dividend payout ratio This Value Line report is as of December 2013 Estimate the stock price at that time, and show the calculation below Find the estimated growth rate by using the 2013 dividend per share ($1 24) and the 16 18 column estimate (2017) of $1 52, with an NPER of 4 years Dis the 2014 projected dividend per share of $1 30 Use an 8 6 discount rate Later in the course we will learn this is estimated as the 10 year Treasury YTM at the time of 3 1 , plus a market risk premium of 5 5 times Calculate expected return as D P actual (recent price $39 36) the growth rate POTLATCH CORP NDO PCH RECENT PE VALUE PRICE 39 36 RATIO Media 28 0 PE RATIO YLD 3 2 LINE TIMELINESS 3 Lowered 96 13 High 50 1 50 0 33 7 41 8 409 43 4 Target Price Range SAFETY 3 Lowred 100159 LEGENDS 2016 2017 2018 1201 Cash Flowpsh 120 TECHNICAL 4 Lowered 96 13 Relative Price Strength 100 Optio Yes BETA 1 001 00 Market Shaded and recessors 80 2016 18 PROJECTIONS 64 Ann Total Price Gain Retum High 88 1989 228 M 32 Low ( 25) 9 Insider Decisions 20 NDJEMAMJJ 16 to Buy OOOOOOOO Options 0 0 0 1 0 0 0 0 12 to 50 00 i Institutional Decisions TOT RETURN 8 13 8 422012 100003 202013 Thes VE ARITH 21 STOCK Percent INDEX to Buy 88 100 14 102 y 278 to Sol 00 85 88 traded 7 320 3 yr 32525 33070 33207 89 7 syr 3 0 802 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 VALUE LINE PUB LLC 16 18 54 11 54 15 57 88 63 81 61 88 4501 52 03 46 73 50 96 41 41 42 13 11 07 11 95 13 48 12 37 13 00 14 20 15 35 Sales per sh 17 45 6 41 6 48 6 60 5 54 3 67 226 5 46 3 58 4 17 3 85 441 2 49 2 92 1 91 1 75 1 71 2 50 2 85 Cash Flow per sh 3 45 1 24 128 141 d 17 0232 01 79 188 52 1 13 1 50 2 36 1 73 2 04 1 12 102 1 08 1 85 2 15 Faminas per shA 250 1 71 174 1 74 1 74 1 17 60 60 60 2 12 1 98 2 04 2 04 2 04 1 84 1 24 1 24 1 30 Divds Deeld per sh 1 52 5 15 474 8120 5 55 132 1 81 2 75 169 3780 1 15 82 66 29 29 58 40 50 Cap Spending per sh 32 82 32 19 750 31 79 28 69 24 98 15 07 18 28 2322 24 01 14 68 1473 4 99 5 77 5 11 3 54 3 43 3 85 4 20 Book Value per sh 5 95 2899 20 92 2897 2035 2031 28581 28981 292 29 37 38 62392839 74 363 40103 4020 40 39 40150 40 70 Common Shs Outsig 41 30 9876 3113 2012 143 NMF 44 1 252 27 132 309 341 320 Bold are Avg Ann' PIE Ratio 267 2 11 1 64 1 61 NMF 2 35 1 36 1 01 1 43 68 1 97 2 14 2 05 Vaune Relative PIE Ratio 1 75 3 8 4 3 4 49 48 3 75 20 23 14 12 5 3 4 4 50 7 6 59 5 3 3 7 Avg Ann'l Div'd Yield 2 3 CAPITAL STRUCTURE as of 6 30 13 1506 61351 5 1496 1 16078 1654 0 4400 4762 539 4 497 4 525 1 S75 625 Sales (Smill 720 Total Debt $320 1 mil Due in 5 Yrs $67 9 mill 14 6 13 5 10,9 10 5 120 20 8 25 5 200 LT Debt $320 1 mill 20 9 212 24 0 20 Operating Margin LT interest $23 0 mill 24 0 1049 883 89 4 910 80 1 302 347 312 29 1 262 26 0 28 0 Depreciation (Smill) 35 0 (Total int coverage 3 3x, LT int eamed 3 3x) 532 15 3 330 586 932 688 81 7 452 41 1 43 0 75 0 90 0 (Net Profit (Smit 110 (72 of Capt) 33 9 94 30 6 7 75 9 9 27 7 12 0 8 0 income Tax Rate 8 0 Leases Uncapitalized Annual Rentals $3 3 mill 3 5 1 15 2 2 3 6 5 6 15 6 17 2 8 4 Pension Assets 12 12 5345 6 mil 8 3 8 2 13 1 14 1 Net Profit Margin 15 1 160 8 2551 2556 1602 49 3 1914 632 958 573 745 110 150 Working Cap'l (Small) 305 Oblig $445 5 mill 618 3 335 4333 1 321 5 3213 2209 388 4 3635 3447 3492 320 310 Long Term Debt (Smil 300 Preferred Stock None 470 9 67147051 5779578 3 1982 229 8 2044 1421 138 6 155 170 Shr Equity Smill) 245 Common Stock 40 529 285 shares 7 1 3 7 4 5 7 9 11,9 18 9 15 5 10 4 11 39 11 44 18 0 20 5 Return on Total Cap 21 5 11 3 2 3 47 10 1 16 1 347 35,6 22 18 MARKET CAP $1 6 billion (Mid Cap) 28 9 310 48 5 52 0 Return on Shr Equity 44 5 7 6 NVF 22 NMF 2 7 NUF 3 NUF NMF NMF 16 5 20 5 Retained to Com Eq 18 5 CURRENT POSITION 2011 2012 6 30 13 32 115 SMLL) 53 NMF 83 117 99 NMF NMF 116 67 60 Al Divds to Net Prof 58 no BUCJMECC Dina Alts Remis Plan Parsin Estimated Price 38 48 Expected return 8 52 SE L 10 anh on end

Question

Find the estimated growth rate by using the 2013 dividend per share ($1 24) and the 16 18 column estimate (2017) of $1 52, with an NPER of 4 years  20 3 ( 1 14 ta IM www 102 shares PCH is a good candidate for the DDM because of its very high dividend payout ratio  This Value Line report is as of December 2013  Estimate the stock price at that time, and show the calculation below  Find the estimated growth rate by using the 2013 dividend per share ($1 24) and the 16 18 column estimate (2017) of $1 52, with an NPER of 4 years  Dis the 2014 projected dividend per share of $1 30  Use an 8 6  discount rate  Later in the course we will learn this is estimated as the 10 year Treasury YTM at the time of 3 1 , plus a market risk premium of 5 5  times Calculate expected return as D    P  actual (recent price $39 36)   the growth rate POTLATCH CORP  NDO PCH RECENT PE VALUE PRICE 39 36 RATIO Media 28 0   PE RATIO YLD 3 2  LINE TIMELINESS 3 Lowered 96 13 High 50 1 50 0 33 7 41 8 409 43 4 Target Price Range SAFETY 3 Lowred 100159 LEGENDS 2016 2017 2018 1201 Cash Flowpsh 120 TECHNICAL 4 Lowered 96 13 Relative Price Strength 100 Optio  Yes BETA 1 001 00   Market Shaded and recessors  80 2016 18 PROJECTIONS  64 Ann Total Price Gain Retum High 88 1989 228 M  32 Low ( 25) 9 Insider Decisions  20 NDJEMAMJJ  16 to Buy OOOOOOOO Options 0 0 0 1 0 0 0 0  12 to 50 00 i Institutional Decisions   TOT  RETURN 8 13  8 422012 100003 202013 Thes VE ARITH 21 STOCK Percent INDEX to Buy 88 100 14 102 y  278 to Sol 00 85 88 traded 7 320 3 yr 32525 33070 33207 89 7 syr 3 0 802 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 VALUE LINE PUB  LLC 16 18 54 11 54 15 57 88 63 81 61 88 4501 52 03 46 73 50 96 41 41 42 13 11 07 11 95 13 48 12 37 13 00 14 20 15 35 Sales per sh 17 45 6 41 6 48 6 60 5 54 3 67 226 5 46 3 58 4 17 3 85 441 2 49 2 92 1 91 1 75 1 71 2 50 2 85 Cash Flow per sh 3 45 1 24 128 141 d  17 0232 01 79 188 52 1 13 1 50 2 36 1 73 2 04 1 12 102 1 08 1 85 2 15 Faminas per shA 250 1 71 174 1 74 1 74 1 17  60  60 60 2 12 1 98 2 04 2 04 2 04 1 84 1 24 1 24 1 30 Divds Deeld per sh 1 52 5 15 474 8120 5 55 132 1 81 2 75 169 3780 1 15 82 66 29 29 58  40 50 Cap Spending per sh 32 82 32 19 750 31 79 28 69 24 98 15 07 18 28 2322 24 01 14 68 1473 4 99 5 77 5 11 3 54 3 43 3 85 4 20 Book Value per sh 5 95 2899 20 92 2897 2035 2031 28581 28981 292 29 37 38 62392839 74 363 40103 4020 40 39 40150 40 70 Common Shs Outsig 41 30 9876 3113 2012    143 NMF 44 1 252 27 132 309 341 320 Bold are Avg Ann' PIE Ratio 267 2 11 1 64 1 61 NMF 2 35 1 36 1 01 1 43  68 1 97 2 14 2 05 Vaune Relative PIE Ratio 1 75 3 8  4 3  4 49 48  3 75 20  23  14  12  5 3  4 4  50  7 6  59  5 3  3 7  Avg Ann'l Div'd Yield 2 3  CAPITAL STRUCTURE as of 6 30 13 1506 61351 5 1496 1 16078 1654 0 4400 4762 539 4 497 4 525 1 S75 625 Sales (Smill 720 Total Debt $320 1 mil  Due in 5 Yrs $67 9 mill 14 6  13 5  10,9  10 5  120  20 8  25 5  200  LT Debt $320 1 mill 20 9  212 24 0  20  Operating Margin LT interest $23 0 mill 24 0  1049 883 89 4 910 80 1 302 347 312 29 1 262 26 0 28 0 Depreciation (Smill) 35 0 (Total int coverage  3 3x, LT int eamed  3 3x) 532 15 3 330 586 932 688 81 7 452 41 1 43 0 75 0 90 0 (Net Profit (Smit 110 (72  of Capt) 33 9 94  30 6  7 75 9 9  27 7  12 0  8 0  income Tax Rate 8 0  Leases Uncapitalized Annual Rentals $3 3 mill  3 5  1 15 2 2  3 6  5 6  15 6  17 2  8 4  Pension Assets 12 12 5345 6 mil  8 3  8 2  13 1  14 1  Net Profit Margin 15 1  160 8 2551 2556 1602 49 3 1914 632 958 573 745 110 150 Working Cap'l (Small) 305 Oblig  $445 5 mill  618 3 335 4333 1 321 5 3213 2209 388 4 3635 3447 3492 320 310 Long Term Debt (Smil 300 Preferred Stock None 470 9 67147051 5779578 3 1982 229 8 2044 1421 138 6 155 170 Shr  Equity Smill) 245 Common Stock 40 529 285 shares 7 1  3 7  4 5  7 9  11,9  18 9  15 5  10 4  11 39 11 44 18 0  20 5  Return on Total Cap 21 5  11 3  2 3  47  10 1  16 1  347  35,6  22 18 MARKET CAP  $1 6 billion (Mid Cap) 28 9  310  48 5  52 0  Return on Shr  Equity 44 5  7 6  NVF 22  NMF 2 7  NUF 3  NUF NMF NMF 16 5  20 5  Retained to Com Eq 18 5  CURRENT POSITION 2011 2012 6 30 13 32  115  SMLL) 53  NMF 83  117  99  NMF NMF 116  67  60  Al Divds to Net Prof 58  no BUCJMECC  Dina Alts Remis Plan Parsin Estimated Price 38 48 Expected return 8 52  SE L 10 anh on  end

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Find the estimated growth rate by using the 2013 dividend per share ($1.24) and the 16-18 column estimate (2017) of $1.52, with an NPER of

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