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The data for questions 28 through 36 is at the bottom of the Exhibit spreadsheet labelled Exhibit II. PACCAR is a manufacturer of trailer-truck cabs and demand for cabs is cyclical. PACCAR shares are currently priced at $101. Data for fiscal 2022, which ends on December 31, is forecast and you believe the 2012 to 2022 data reasonably reflects profitability over a business cycle [in reality it likely does not]. The Rate of Return required on PACCAR common is estimated at 8.50%. Using the data from 2012 through 2022, calculate normalized EPS for PACCAR using the average EPS. Round to 1 cent. Normalized EPS: Based on the normalized EPS, what is the PE Ratio? Round to 2 decimal places. PE Ratio: What is the average Return on Equity, or ROE, for PACCAR? Round to 2 decimal places or 1 basis point. Note the critical format for ROE is EPS / Book Value E t+2 or Net Income / Common Equity t+1. Average ROE: Calculate a normalized EPS forecast for fiscal 2023 using the average ROE and round to 1 cent. Normalized EPS based on ROE: Based on the normalized EPS forecast for 2023 using average ROE, what is the PE Ratio? Round to 2 decimal places. Calculate PACCAR's Residual Income per share for 2021 and round to one cent. 2021 Residual Income per share: Calculate PACCAR's Residual Income per share for 2022 and round to one cent. 2022 Residual Income per share: You forecast future Returns on Equity as shown on the Exhibit. Beginning in 2023, ROE is expected to decline to 16% and then proceed through a cycle and reach a steady state, long-term ROE of 15% in 2028 . PACCAR's payout ratio is forecast to remain at 50% in the future. The consensus Rate of Return on PACCAR common is 8.50%. At the end of the forecast horizon, the premium of intrinsic value over book value is forecast to be 40%. Calculate the Intrinsic Value of a share of common and round to one cent. 1V0: Rather than forecast the premium of intrinsic value over book value, Book Value is forecast to grow at a constant 2.50% beginning in 2029. Calculate the Intrinsic Value of a share of common and round to one cent. IV0: The data for questions 28 through 36 is at the bottom of the Exhibit spreadsheet labelled Exhibit II. PACCAR is a manufacturer of trailer-truck cabs and demand for cabs is cyclical. PACCAR shares are currently priced at $101. Data for fiscal 2022, which ends on December 31, is forecast and you believe the 2012 to 2022 data reasonably reflects profitability over a business cycle [in reality it likely does not]. The Rate of Return required on PACCAR common is estimated at 8.50%. Using the data from 2012 through 2022, calculate normalized EPS for PACCAR using the average EPS. Round to 1 cent. Normalized EPS: Based on the normalized EPS, what is the PE Ratio? Round to 2 decimal places. PE Ratio: What is the average Return on Equity, or ROE, for PACCAR? Round to 2 decimal places or 1 basis point. Note the critical format for ROE is EPS / Book Value E t+2 or Net Income / Common Equity t+1. Average ROE: Calculate a normalized EPS forecast for fiscal 2023 using the average ROE and round to 1 cent. Normalized EPS based on ROE: Based on the normalized EPS forecast for 2023 using average ROE, what is the PE Ratio? Round to 2 decimal places. Calculate PACCAR's Residual Income per share for 2021 and round to one cent. 2021 Residual Income per share: Calculate PACCAR's Residual Income per share for 2022 and round to one cent. 2022 Residual Income per share: You forecast future Returns on Equity as shown on the Exhibit. Beginning in 2023, ROE is expected to decline to 16% and then proceed through a cycle and reach a steady state, long-term ROE of 15% in 2028 . PACCAR's payout ratio is forecast to remain at 50% in the future. The consensus Rate of Return on PACCAR common is 8.50%. At the end of the forecast horizon, the premium of intrinsic value over book value is forecast to be 40%. Calculate the Intrinsic Value of a share of common and round to one cent. 1V0: Rather than forecast the premium of intrinsic value over book value, Book Value is forecast to grow at a constant 2.50% beginning in 2029. Calculate the Intrinsic Value of a share of common and round to one cent. IV0
