Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help in answering the following questions based off the attachments. Thanks PACIFIC HEALTHCARE (A) Stock Valuation 1. a. What is the estimated value of

Please help in answering the following questions based off the attachments. Thanks

PACIFIC HEALTHCARE (A)

Stock Valuation

1. a. What is the estimated value of Pacific Healthcare stock on December 31, 2013?

b. Is the stock under- or over-priced?

c. If investors estimate that Pacific Healthcare will grow about 10 percent per year for the next five years (2014-18), what constant growth rate (2019+) are they using to actually price the stock? (Hint:

what constant growth rate (2019+) produces an actual December 31, 2013 stock price of $8?)

2. What is the estimated stock value on December 31 2014, 2015, 2016, 2017, and 2018, assuming that the stock is in equilibrium?

3. a. What are the estimated dividend yield, capital gains yield, and total return for 2014, 2015, 2016, 2017, and 2018?

b. Why do the dividend yield and capital gains yield change every year?

c. What do you notice about the total return?

d. What is the estimated dividend yield and capital gains yield after 2018? No additional calculations are required.

4. In your opinion, what are three key learning points from this case?

image text in transcribed Cases in Healthcare Finance, 5th Edition Copyright 2014 by FACHE CASE 15 QUESTIONS PACIFIC HEALTHCARE (A) Stock Valuation 1. a. What is the estimated value of Pacific Healthcare stock on December 31, 2013? b. Is the stock under- or over-priced? c. If investors estimate that Pacific Healthcare will grow about 10 percent per year for the next five years (2014-18), what constant growth rate (2019+) are they using to actually price the stock? (Hint: what constant growth rate (2019+) produces an actual December 31, 2013 stock price of $8?) 2. What is the estimated stock value on December 31 2014, 2015, 2016, 2017, and 2018, assuming that the stock is in equilibrium? 3. a. What are the estimated dividend yield, capital gains yield, and total return for 2014, 2015, 2016, 2017, and 2018? b. Why do the dividend yield and capital gains yield change every year? c. What do you notice about the total return? d. What is the estimated dividend yield and capital gains yield after 2018? No additional calculations are required. 4. In your opinion, what are three key learning points from this case? 11/18/2013

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics: An Intuitive Approach With Calculus

Authors: Thomas Nechyba

2nd Edition

1305650468, 978-1305650466

More Books

Students also viewed these Finance questions

Question

2. In what way can we say that method affects the result we get?

Answered: 1 week ago