Question 2: On November 1, 2019. Mr. Daniel Kim, an individual stock investor, pays attention to the news that Dongguk Corp, may report earnings surprise thanks to the booming demand for natural gas pipe associated with rising shale gas production in the US. In order to make an investment judgement through a price multiple comparison method, Mr. Kim chooses to deploy PER (Price-Earnings Ratio) computed as following: PER per share stock price of Dongguk Corp. (November 1, 2019) / expected per share net income for the fiscal year of 2019 For comparison purpose, Mr. Kim selects 5 firms that belong to the same industry as Dongguk Corp. that are also similar in firm size, and calculates the average PER using above formula. As a result, Mr. Kim gets a multiple of 15 for Dongguk Corp, whereas the average multiple of those five firms is 12. Based on this multiple comparison, Mr. Kim concluded that the stock market overprices the shares of Dongguk Corp. and gives up investment in Dongguk Corp. shares. Requirement 1: If you are a financial analyst, what is your investment advice to Mr. Daniel Kim? (12 points) Requirement 2: The method of price multiple comparison, as explained above, has implementation problems as well as conceptual problems. Indicate one for each of implementation and conceptual problems. (13 points)

booming demand for natural gas pipe associated with rising shale gas production in the US In order to make an investment judgement through a price multiple comparison method, Mr. NG&OUs Kim chooses to deploy PER (Price-Earnings Ratio) computed as following PER per share stock price of Dongguk Corp. November 1, 2019) / expected per share net income for the fiscal year of 2019 For comparison purpose, Mr. Kim selects 5 firms that belong to the same industry as Dongguk Corp. that are also similar in firm size, and calculates the average PER using above formula. As a result, Mr. Kim gets a multiple of 15 for Dongguk Corp, whereas the average multiple of those five firms is 12. Based this multiple comparison, Mr. Kim concluded that the stock market overprices the shares of Dongguk Corp. and gives up investment in Dongguk Corp. shares. Requirement 1: If you are a financial analyst, what is your investment advice to Mr. Daniel Kim? (12 points) Requirement 2 The method of price multiple comparison, as explained above, has Indicate one for each of implementation problems as well as conceptual problems. implementation and conceptual problems. (13 points) Question 3: An analyst presents you with the following pro forma (in millions of US $) that He asks you to value the 1,380 gives his forecast of earnings and dividends for 2020-2024. million shares outstanding at the end of 2019, when common shareholder's equity (book Use a required rate of return (cost of equity) of value of net asset) stood at $4,310 million. 10% per annum in your calculations. 2024E 2023B 629.0 367.0 2022B 599.0 349.0 2021E 2020B 660.4 385.4 570.0 160.0 388.0 115.0 Earnings Dividends Requirement 1: Forecast book value of net assets, return on common equity (ROCE), and residual earnings for each of the years 2020-2024. (10 points) 3:59 lLTE business/finance / finance questions and answers Th... Dividend Per Share Were Made At End Of 2012 Question: The Following Forecast Of Earnings Per Share And Dividend Per Share Were... The following forecast of earnings per share and dividend per share were made at end of 2012 for a firm with book value share of $22 Year: 2013E, 2014E, 2015E, 2016E, 2017E EPS: 3.9, 3.7, 3.31, 3.59, 3.9 DPS: 1, 1,1,1,1 The firm has an equity cost of capital of 12% per annum. A) calculate the abnormal earnings growth that is forecasted each year from 2014-2017. B) what is per share value of equity at the end of 2012 based on abnormal earnings growth? C) what is the forecasted per share value of equity at the end of 2017? D) what is expected trailing P/E at end of 2017? E) what is intrinsic price to book ratio? This problem has been solved! See the