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please note that I only need help with the last 3 questions starting with the one thats worth 50 marks thank you only need the
please note that I only need help with the last 3 questions starting with the one thats worth 50 marks
thank you
only need the last answers starting from the one thats worth 50 marks.
03 (Don't Rushit!) ERP is 3.5% and the Risk-Proemie is 5% Taxis 26% A high growth company reported Earnings per Share of $2.75 in 2000 from which it paid zero dividend. Book Value of dett $1 BN and Book Value of Equity is SJ BN. It currently pays spread of 20bp over Treasures on its debt. Total shares outstanding are 63 million. The current share price is $83. Its current bet is 1.25 What is the historical PB P/E 21 Mark What is the forwards PE P./E, 2 Marks What is the forwards PEG ratio? 2 Marks Revenues, which were $4482.5 Million in 2000, and Earnings are both expected to grow at a constant rate for 5 years, during which time the company is expected to continue its policy of zero dividends. Through both its high growth and transition phases, capex is expected to be 175% of depreciation, which in turn is expected to be 12.5% of revenue. Working capital is expected to be 10% of revenue, and the company is expected to keep the same capital structure. In their stable phases, firms of this type are expected to have ROEs of 10%, Betas of 0.85, Debe Equity ratios of 50% and Pay out ratios of 50%. Capex will be 150% of Depreciation, which in turn is expected to be 10% of revenues. WC stays at 10% of revenues. Starting in 2006, the fimm is expected to enter its transition phase, where both ROE and Beta will decline linearly towards their stable rates. This phase is expected to last from 2006 to 2015 inclusive. It will achieve stable growth in 2016. Starting in 2006, the fimm is expected to introduce a dividend equivalent to 2.5% of net income. This dividend will increase by 2.5% a year during the transition phase. What is the current value of each share? 50 Marks Is it a Buy Sell Hold? Mark Is the terminal growth rate calculated consistent with the risk free rate used? Explain 3 Marks The bota at the end is substantially lower that the starting beta, despite Significantly higher leverage Is this consistent? Explain 5 Marks 03 (Don't Rushit!) ERP is 3.5% and the Risk-Proemie is 5% Taxis 26% A high growth company reported Earnings per Share of $2.75 in 2000 from which it paid zero dividend. Book Value of dett $1 BN and Book Value of Equity is SJ BN. It currently pays spread of 20bp over Treasures on its debt. Total shares outstanding are 63 million. The current share price is $83. Its current bet is 1.25 What is the historical PB P/E 21 Mark What is the forwards PE P./E, 2 Marks What is the forwards PEG ratio? 2 Marks Revenues, which were $4482.5 Million in 2000, and Earnings are both expected to grow at a constant rate for 5 years, during which time the company is expected to continue its policy of zero dividends. Through both its high growth and transition phases, capex is expected to be 175% of depreciation, which in turn is expected to be 12.5% of revenue. Working capital is expected to be 10% of revenue, and the company is expected to keep the same capital structure. In their stable phases, firms of this type are expected to have ROEs of 10%, Betas of 0.85, Debe Equity ratios of 50% and Pay out ratios of 50%. Capex will be 150% of Depreciation, which in turn is expected to be 10% of revenues. WC stays at 10% of revenues. Starting in 2006, the fimm is expected to enter its transition phase, where both ROE and Beta will decline linearly towards their stable rates. This phase is expected to last from 2006 to 2015 inclusive. It will achieve stable growth in 2016. Starting in 2006, the fimm is expected to introduce a dividend equivalent to 2.5% of net income. This dividend will increase by 2.5% a year during the transition phase. What is the current value of each share? 50 Marks Is it a Buy Sell Hold? Mark Is the terminal growth rate calculated consistent with the risk free rate used? Explain 3 Marks The bota at the end is substantially lower that the starting beta, despite Significantly higher leverage Is this consistent? Explain 5 Marks Step by Step Solution
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