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Just need help with 2,3 and 4. Thank you so much Valuation of Alibaba 10/27/14 A slew of Exercises for stock valuation: 1 Over the
Just need help with 2,3 and 4. Thank you so much
Valuation of Alibaba 10/27/14 A slew of Exercises for stock valuation: 1 Over the last 125 years, ExonMobil Corp. (XOM) has evolved from a regional marketer of kerosene in the United States to the largest publicly traded petroleum and company in the world. Today, XOM operates in most o by familiar brands like Exxon, Esso and Mobil. According to petrochemical f the world's countries and is known information obtained from The Value Line Investment Survey in mid-2008, XOM then had a current market price of $85, an expected dividend per share of $1.65, expected cash flow (CF) per share of $12.15, expected F growth of 9.5% per year, and a typical P/CF ratio of 9, Calculate the expected rate of return on XOM over the 2008-13 five-year period. Would potential shareholders that require a 15% risk-adjusted annual rate of return find XOM attractive? 2 In 2008, UAL Corporation (UAUA), parent company of United Air Lines, Inc., plunged from 35.25 to 5.28. Assume UAL can avoid bankruptcy and that a reasonable expected return on such a risky stock is 20% per year. Use a financial calculator and annual compounding to compute the number of years it would take an investor holding the stock at 5.28 to recoup a purchase price of 35.25. 3 Over the 2002-07 time frame, the Russell 2000 Index earned a 14.87% annual rate of return. During the same time frame, independent domestic oil and gas producer Denbury Resources, Inc. (DNR) common stock rose from 11.30 to 29.75. Use a financial calculator and annual compounding to compute the amount by which DNR outperformed the Index over this five-year period. 4 Pfizer, Inc. (PFE) is a major producer of pharmaceuticals, hospital products, consumer products, and animal health lines. According to The Value Line Investment Survey dividends are expected to grow at a rate of 5.5% per year for the foreseeable future. If the stock presently sells for $21 per share and is expected to pay a $1.32 dividend next year, use the constant-growth model to calculate the expected rate of return to stockholders. Ifthe typical investor has a required rate of return of 12% per year, is the stock a bargain? Why or why not? CHATStep by Step Solution
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