Problem 31
valuation estimates for the firm. Assume the values provided are from you that the tim equity betais 1.40, the risk free rate is 2.75 percent, and the man me the values provided are from year end 2015. Also assume the rise free rate is 2.75 percent, and the market risk premium is Dividends per share Retum on equity Book value per share $ 2.04 9.500 $17.05 Earnings 2015 vote per share Average price multiple Forecasted growth rate $5.00 13.10 13.48% Cash Flow $6.60 9.42 11.41% Sales $25.65 2.36 7.34% 47. Constant Perpetual Growth Model (LOI, CFA6) What are the sustainable growth rate and required return for Beagle Beauties? Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth model. 28. Price Ratios (L04, CFAS) Using the P/ EP/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties, 29. Residual Income Model (LO3, CFA9) Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate share price for Beagle Beauties with the residual income model. 30. Clean Surplus Dividend (LO3, CFA9) Use the information from Problem 29 and calculate the stock price with the clean surplus dividend. Do you get the same stock price as in Problem 297 Why or why not? 31. Stock Valuation (LOI, LOJ, L04) Given your answers in Problems 27-30, do you feel Beagle Beauties is overvalued or undervalued at its current price of around 582? At what price do you feel the stock should sell? valuation estimates for the firm. Assume the values provided are from you that the tim equity betais 1.40, the risk free rate is 2.75 percent, and the man me the values provided are from year end 2015. Also assume the rise free rate is 2.75 percent, and the market risk premium is Dividends per share Retum on equity Book value per share $ 2.04 9.500 $17.05 Earnings 2015 vote per share Average price multiple Forecasted growth rate $5.00 13.10 13.48% Cash Flow $6.60 9.42 11.41% Sales $25.65 2.36 7.34% 47. Constant Perpetual Growth Model (LOI, CFA6) What are the sustainable growth rate and required return for Beagle Beauties? Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth model. 28. Price Ratios (L04, CFAS) Using the P/ EP/CF, and P/S ratios, estimate the 2016 share price for Beagle Beauties, 29. Residual Income Model (LO3, CFA9) Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate share price for Beagle Beauties with the residual income model. 30. Clean Surplus Dividend (LO3, CFA9) Use the information from Problem 29 and calculate the stock price with the clean surplus dividend. Do you get the same stock price as in Problem 297 Why or why not? 31. Stock Valuation (LOI, LOJ, L04) Given your answers in Problems 27-30, do you feel Beagle Beauties is overvalued or undervalued at its current price of around 582? At what price do you feel the stock should sell
