Hello- If I could get answers to the attached that would be greatly appreciated. Thanks!

NORTHWESTERN UNIVERSITY Kellogg School of Management FINC 430 (Finance 1) Quiz 5: Valuation with Multiples To value projects or companies and to obtain terminal values (also known as continuation values), practitioners often supplement their valuation based on free cash flows (i.e., the discounted cash flow analysis, DCF) with a valuation based on multiples (or just \"comps\"). A Stylized Example Consider a growing firm that produces cash of $10 million next year. The firm's cash flow growth rate is 15% per annum. The firm's cost of capital is 20%. The firm is capitalized fully with equity and pays no taxes. 1) What is the market value of this firm? 2) What is the firm's P/E ratio? Valuing PepsiCo and Coke using Multiples. Use the data on adjusted closing prices in the provided spreadsheet to answer Questions 3 and 4. 3) Use Coca-Cola's P/E ratio to value PepsiCo's share price in 2013. 4) Use PepsiCo's P/E ratio to value Coca-Cola's share price in 2013. The P/E Ratio and the S&P 500 The Dividend Discount Model (DDM) can be used to think about an entire market index such as the S&P 500 in the same way it is used to think about an individual firm. In this problem we use the DDM with a constant dividend growth rate and constant discount rates to think about the valuation of the U.S. stock market overall during a particularly interesting period. As of August 1999, the value-weighted average P/E (price-earnings) ratio for the U.S. stock market (or, more precisely, for the S&P 500 Index) was at a historical high of 36. In contrast, over the period from 1/1968 to 12/2000, the S&P's average P/E ratio was 16. For the following problems, assume the dividend payout ratio on the S&P 500 Index is 50% (which is its historical average from 1/1968 to 12/2000) and that it does not change in any of the scenarios considered. Hint: Use the perpetuity-version of the DDM to express the price as a function of the next dividend (DIV1), the cost of capital (r), and the growth rate (g) of expected earnings (and hence dividends given the constant payout ratio). Then realize that next period's earnings per share (EPS1) can be rewritten as EPS0(1+g). Then divide the price by EPS0 to obtain the P/E ratio. Now you have an expression linking the P/E ratio to r, g, and the dividend payout ratio (DIV/EPS). From this expression, you can answer the following. 1 Note: Robert J. Shiller of YaleNobel Laureate in Economics in 2013used similar calculations in his best-selling book \"Irrational Exuberance\Date Open High 2013-12-02 84.43 2013-11-01 84.15 2013-10-01 79.38 2013-09-03 80.48 2013-08-01 84.04 2013-07-01 81.96 2013-06-03 80.67 2013-05-01 82.36 2013-04-01 78.76 2013-03-01 75.55 2013-02-01 73.08 2013-01-02 69.18 PepsiCo (PEP) Low Close Volume 84.52 79.96 82.94 4890600 86.73 83.83 84.46 4085700 85.5 78.67 84.09 4956000 82.94 78.32 79.5 4864300 85.43 78.61 79.73 4436300 87.06 80.29 83.54 5447000 83.19 78.2 81.79 5934000 84.78 80.7 80.77 4537700 84.32 78.25 82.47 5819300 79.27 75.37 79.11 5715000 76.33 70.98 75.77 6780500 73.46 68.64 72.85 5993400 EPS Adj Close Open 76.676079 77.55204 77.212303 72.997719 72.690422 76.164024 74.568542 73.126205 74.665321 71.623299 68.599388 65.48735 4.37 High 40.1 39.57 38 38.27 40.4 40.5 39.95 42.15 40.39 38.49 37.54 36.99 Low 41.39 40.88 39.96 39.67 40.75 41.25 41.73 43.43 42.96 40.7 39.06 37.87 Coke (KO) Close 38.87 39.22 36.83 37.75 37.8 39.5 38.97 39.99 39.77 38.45 36.54 36.52 Volume Adj Close 41.31 14898700 37.91 40.19 13829500 36.88 39.57 17123100 36.06 37.88 15953000 34.52 38.18 14140800 34.54 40.08 12476200 36.26 40.11 16106200 36.29 39.99 14291200 35.93 42.33 15054700 38.04 40.44 15132800 36.34 38.72 18102300 34.54 37.24 15034500 33.22 1.94