I attached a finance homework, please do questions 1 to 6 and disregard question 7 ..

thank you,

FIN734 Assignment 4 Fall 2016 _________________________________________________________________________________________________ 1. You expect that Company A will experience two stages of growth: High growth stage and stage growth stage. You can find the following information from 2014 financial statement : Current EPS: $ 148.33 Current Capital expenditure per share : $ 130.18 Current Depreciation per share : $ 85.71 The increase in working capital per share is $ 9.47 Net Debt Issue per Share: 7 Book value per share is : $ 720 Assume you use the current year information to find the growth rate in FCFE for the next 5-year high growth stage. However, in stable stage, you assume a growth rate of Earnings is 5%. And you also assume that the return on equity drops to 12%. .The Treasury bond rate is always 4%, and the market risk premium is always 5.26%. The stock was expected to have a beta of 1.05 for the next 5 years. The beta will drop to 0.85 after 5 years. What is value of the stock per share based on FCFE model? 2. Given the following information: Net Income: $ 12,197 Capital Expenditures $ 8175 Depreciation: $ 5377 Change in working capital: $ 4410 Net Debt Issue: $ 1200 Total book value of equity: $ 37019 What is the total reinvestment? What is the equity reinvestment? What is the equity reinvestment rate? What is the expected growth rate in earnings? 3. Given the following information: Net Income: $ 25,197 Capital Expenditures $ 15175 Depreciation: $ 5377 The decrease in non-cash working capital: $ 1110 New Debt Issue: $1200 Debt Payment: $1400 Total book value of equity: $ 47019 What is the total reinvestment? What is the equity reinvestment? What is the equity reinvestment rate? What is the expected growth rate in earnings? 1 FIN734 Assignment 4 Fall 2016 _________________________________________________________________________________________________ 4. ABC is a mature utility company. The firm is assumed to in stable growth, and the following inputs are used to value it : The current net income was $ 6100 million ; Capital expenditures was $12,326 million ; Depreciation was $9,089 million ; The decrease in noncash working capital was $423 million ; Total equity was $52,970 million. The beta is 1; Risk-free rate is 3.2%; and the market return is 8.2%. What is the equity value based on FCFE valuation model? The following information is relevant to Question 5-6 An analyst has gathered data valuation multiples for Merck and three other pharmaceutical companies, which serve as comparable firms: Pfizer ( PFE), Eli Lilly (LLY), and Sanofi-Aventis (SNY). Valuation multiplies for pharmaceutical companies in August 2010: Company Symbol Price/earnings Price/book Price/Sales MRK PFE LLY SNY 9.08 1.96 2.78 15.42 1.48 2.05 8.46 3.62 1.63 10.15 1.12 1.87 Comparable average 11.34 2.074 1.85 5. An analyst is comparing the valuation multiples of Merck with those of three comparable firms. He is likely to conclude that MRK is ___________ using the Price/earnings ratio and is ___________ using price/sales ratio. 6. The analyst is estimating the value of equity of Medtech, a private pharmaceutical company with $ 100 million in revenues. Using the comparable average, what is the value of the equity of this company ? 7. Walmart case Questions: 1) As of February 2010, what is your assessment of the worth of Wal-Mart's stock? 2) Cleary state any assumption 3) Based on your analysis, what recommendation would you make? 2