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PLEASE HELP! Show work please, Thank you, I appreciate it. KIMEA TPET, Inc. ( , , , ) is a North Korean company specialized in
PLEASE HELP! Show work please,
Thank you, I appreciate it.
KIMEA TPET, Inc. ( , , , ) is a North Korean company specialized in recycling pets. The company is privately held by the Great Leader's family. KIMEA TPET's capital structure is entirely made of equity and the last four quarters of earnings amounted to KPW900 per share; also, the company paid KPW 2,700 per share in dividend Kim Jong-Un's family during the current fiscal year. Kim Yo-Jong, the Great Leader's sister is planning to launch an IPO for KIMEATPET in South Korea's stock market; she asks you to tell her at what price should the stock be issued. Be careful if you get it wrong....well...you know...you might get recycled. While assessing KIMEA TPET's stock's intrinsic value, you make the following assumptions: 1. After 3 years, the company's earning (1) will grow at 30%, (2) cease to create value, and (3) have a beta at par with the KOSPI. 2. Over the next 3 years the company's ROE, Payout ratio, and beta will be similar to its three South Korean competitors' median (shown in the table below). Competitors ROE PAYOUT RATIO DEBT-TO-EQUITY BETA relative to the KOSPI RATIO KIMICHI-T 140% 25% 2 4.0 ( ) WTFKIM 140% 25% 3 3.9 ( ) KIMNUKEALL 150% 22% 1 4.0 ( ) Further, you assessed that the long-term borrowing rate from the National Bank of the Great Leader's Glory-North Korea's only state bank-is 27%, the market risk premium (adjusted for country risk) for North Korea is 100%, the tax rate in South Korea is 25%. At what minimum price would you recommend to issue KIMEATPET's stock in Seoul Stock Exchange? KIMEA TPET, Inc. ( , , , ) is a North Korean company specialized in recycling pets. The company is privately held by the Great Leader's family. KIMEA TPET's capital structure is entirely made of equity and the last four quarters of earnings amounted to KPW900 per share; also, the company paid KPW 2,700 per share in dividend Kim Jong-Un's family during the current fiscal year. Kim Yo-Jong, the Great Leader's sister is planning to launch an IPO for KIMEATPET in South Korea's stock market; she asks you to tell her at what price should the stock be issued. Be careful if you get it wrong....well...you know...you might get recycled. While assessing KIMEA TPET's stock's intrinsic value, you make the following assumptions: 1. After 3 years, the company's earning (1) will grow at 30%, (2) cease to create value, and (3) have a beta at par with the KOSPI. 2. Over the next 3 years the company's ROE, Payout ratio, and beta will be similar to its three South Korean competitors' median (shown in the table below). Competitors ROE PAYOUT RATIO DEBT-TO-EQUITY BETA relative to the KOSPI RATIO KIMICHI-T 140% 25% 2 4.0 ( ) WTFKIM 140% 25% 3 3.9 ( ) KIMNUKEALL 150% 22% 1 4.0 ( ) Further, you assessed that the long-term borrowing rate from the National Bank of the Great Leader's Glory-North Korea's only state bank-is 27%, the market risk premium (adjusted for country risk) for North Korea is 100%, the tax rate in South Korea is 25%. At what minimum price would you recommend to issue KIMEATPET's stock in Seoul Stock ExchangeStep by Step Solution
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