Question
OOO has no debt, and an equity cost of capital of 8%. The company is currently valued at $1,000.00 Million. The company has 30 Million
OOO has no debt, and an equity cost of capital of 8%. The company is currently valued at $1,000.00 Million. The company has 30 Million shares.
OOO new product XX generated earning of $2 per share this past year and are expected to grow at a rate of 10% per year until the end of year 5. After that the growth rate will be 4% due to completion in the markets. The dividends are expected from the 6 the year at 60% of the earnings.
Required
- Show the expected earnings from all years from 1 to 5
- Calculate the expected dividend
- Estimate the value of OOO with the new product
- Estimate the total value of OOO
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
8th edition
77861620, 978-0077861629
