Question 4) Growth rates (Stock valuation)

1. The most recent annual dividend I have located is valued at 2.24. The most recent closing stock price is $21.06.

Dividend yield = Annual dividend / Current stock price

= 2.24/21.06

= 10.63%

2. Required return for shareholders = Dividend yield + Capital gains yield

*Growth rate is interpreted as the Capital gains yield*

R = % + % growth rate

R =%

Therefore, this stock has a return of:

3. Suppose instead that you know that the required return is 15 percent. What price should your selected company stock sell for now?

If required return was 15%

P1 = D1 x (1 + G) / r - g

P1 = x (1 + ) / 0.15 -

P1 =

P1 =

Therefore, if required return was 15%, then the stock should sell for:

(millions of U.S. dollars, except share data) December 31 2018 Notes 2019 6.1.3 6.1.3 4,867 128 2,172 182 4.3 and 12.1 4.4 4.5 2.3.2 3,569 17.296 2,756 ASSETS Current assets: Cash and cash equivalents Restricted cash Trade accounts receivable and other (including 298 and 366 from related parties at December 31, 2019 and 2018, respectively) Inventories Prepaid expenses and other current assets Assets held for sale Total current assets Non-current assets: Goodwill and intangible assets Property, plant and equipment and biological assets Investments in associates and joint ventures Other investments Deferred tax assets Other assets Total non-current assets Total assets 4,432 20,744 2,834 2,111 32,475 28,616 5.1 and 5.3 5.2, 5.3 and 7 2.4 2.5 10.4 4.6 5,432 36,231 6,529 772 8,680 1,648 59,292 87,908 5,728 35,638 4,906 855 8,287 3,360 58,774 91,249 6.1.2.1 and 7 2,869 3,167 4.7 and 12.2 9.1 4.8 12,614 516 4,910 378 LIABILITIES AND EQUITY Current liabilities: Short-term debt and current portion of long-term debt Trade accounts payable and other (including 251 and 201 to related parties at December 31, 2019 and 2018, respectively) Short-term provisions Accrued expenses and other liabilities Income tax liabilities Liabilities held for sale Total current liabilities Non-current liabilities: Long-term debt, net of current portion Deferred tax liabilities Deferred employee benefits Long-term provisions Other long-term obligations Total non-current liabilities Total liabilities 13,981 539 4,709 238 821 23,455 2.3.2 21,287 6.1.2.2 and 7 10.4 8.2 9.1 9.2 11,471 2,331 7,343 2,475 2,518 26,138 47,425 9,316 2,374 6,982 1,995 3,019 23,686 47,141 Contingencies and commitments 9.3 and 9.4 11 364 364 Equity: Common shares (no par value, 1,151,576,921 and 1,151,576,921 shares authorized, 1,021,903,623 and 1,021,903,623 shares issued, and 1,012,079,421 and 1,013,568,258 shares outstanding at December 31, 2019 and 2018, respectively) Treasury shares (9,824,202 and 8,335,365 common shares at December 31, 2019 and 2018, respectively, at cost) Additional paid-in capital Retained earnings Reserves Equity attributable to the equity holders of the parent Non-controlling interests Total equity Total liabilities and equity (602) 34,826 22,883 (18,950) 38,521 1,962 40,483 87,908 (569) 34,894 25,611 (18,214) 42,086 2,022 44,108 91,249 2019 2018 Year Ended December 31, 2017 5,330 4,575 (2,391) Net (loss) income (including non-controlling interests) Items that can be recycled to the consolidated statements of operations Available-for-sale-investments: Gain arising during the period Reclassification adjustments for loss (gain) included in the consolidated statements of operations 497 497 354 755 Derivative financial instruments: Gain (loss) arising during the period Reclassification adjustments for (gain) loss included in the consolidated statements of operations (340) (1,004) (650) 353 1,108 28 (312) 177 Exchange differences arising on translation of foreign operations: Gain (loss) arising during the period Reclassification adjustments for gain included in the consolidated statements of operations (1,996) 2,025 (105) 72 (15) (2,011) (21) 2,004 Share of other comprehensive (loss) income related to associates and joint ventures (Loss) gain arising during the period Reclassification adjustments for loss (gain) included in the consolidated statements of operations (82) (239) 341 10 (72) (123) (362) 217 558 Income tax benefit (expense) related to components of other comprehensive income (loss) that can be recycled to the consolidated statements of operations 279 (274) 167 Items that cannot be recycled to the consolidated statements of operations Investments in equity instruments at FVOCI: Gain (loss) arising during the period Share of other comprehensive gain (loss) related to associates and joint ventures 28 (603) 10 (5) 38 (259) (608) 344 1,098 29 (32) 228 Employee benefits - Recognized actuarial (losses) gains Share of other comprehensive income (loss) related to associates and joint ventures Income tax (expense) benefit related to components of other comprehensive income that cannot be recycled to the consolidated statements of operations Total other comprehensive (loss) income Total other comprehensive (loss) income attributable to: Equity holders of the parent Non-controlling interests 42 (624) (1,575) 4,083 (666) 42 (1,478) (97) 4,037 46 (624) (3,015) (1,575) 3,755 4,083 8,658 Total comprehensive (loss) income Total comprehensive (loss) income attributable to: Equity holders of the parent Non-controlling interests Total comprehensive (loss) income (3,120) 105 (3,015) 3,671 84 8,605 53 3,755 8,658 113.95 Trade Time Trade Date 07:54AM Daily High 09/28/2020 Daily Low 113.95 52-week High 114.10 52-week Low Exchange 113.89 115.96 Open Prev. Close 101.04 BER Key Data Coupon in % 3.3000% Yield in % Duration - Modified Duration Accrued Interest - Currency USD Bond Data Country USA 4,000,000,000 USD Issue Volume Currency Issue Price Issue Date COUPON 99.65 2/6/2017 Coupon 3.300% Denomination 1000 Quotation Type Payment Type regular interest Special Coupon Type Maturity Date 2/6/2027 Coupon Payment Date 2/6/2021 Payment Frequency No. of Payments per Year 2.0 Coupon Start Date 8/6/2017 Final Coupon Date 2/5/2027 Floater? No Previous Close 207.82 1.579T Open 210.88 Market Cap Beta (5Y Monthly) PE Ratio (TTM) 0.89 Bid 209.19 x 1200 36.23 Ask 209.37 x 800 EPS (TTM) N N/A Day's Range 208.41 - 212.56 52 Week Range 132.52-232.86 Earnings Date N/A Forward Dividend & Yield 2.24 (1.08%) & Ex-Dividend Date Nov 18, 2020 Volume 9,490,499 Avg. Volume 34,954,928 1y Target Est N/A Moody's Rating Rating Rating Update AFFIRM Date of Rating 12/7/2017 (millions of U.S. dollars, except share data) December 31 2018 Notes 2019 6.1.3 6.1.3 4,867 128 2,172 182 4.3 and 12.1 4.4 4.5 2.3.2 3,569 17.296 2,756 ASSETS Current assets: Cash and cash equivalents Restricted cash Trade accounts receivable and other (including 298 and 366 from related parties at December 31, 2019 and 2018, respectively) Inventories Prepaid expenses and other current assets Assets held for sale Total current assets Non-current assets: Goodwill and intangible assets Property, plant and equipment and biological assets Investments in associates and joint ventures Other investments Deferred tax assets Other assets Total non-current assets Total assets 4,432 20,744 2,834 2,111 32,475 28,616 5.1 and 5.3 5.2, 5.3 and 7 2.4 2.5 10.4 4.6 5,432 36,231 6,529 772 8,680 1,648 59,292 87,908 5,728 35,638 4,906 855 8,287 3,360 58,774 91,249 6.1.2.1 and 7 2,869 3,167 4.7 and 12.2 9.1 4.8 12,614 516 4,910 378 LIABILITIES AND EQUITY Current liabilities: Short-term debt and current portion of long-term debt Trade accounts payable and other (including 251 and 201 to related parties at December 31, 2019 and 2018, respectively) Short-term provisions Accrued expenses and other liabilities Income tax liabilities Liabilities held for sale Total current liabilities Non-current liabilities: Long-term debt, net of current portion Deferred tax liabilities Deferred employee benefits Long-term provisions Other long-term obligations Total non-current liabilities Total liabilities 13,981 539 4,709 238 821 23,455 2.3.2 21,287 6.1.2.2 and 7 10.4 8.2 9.1 9.2 11,471 2,331 7,343 2,475 2,518 26,138 47,425 9,316 2,374 6,982 1,995 3,019 23,686 47,141 Contingencies and commitments 9.3 and 9.4 11 364 364 Equity: Common shares (no par value, 1,151,576,921 and 1,151,576,921 shares authorized, 1,021,903,623 and 1,021,903,623 shares issued, and 1,012,079,421 and 1,013,568,258 shares outstanding at December 31, 2019 and 2018, respectively) Treasury shares (9,824,202 and 8,335,365 common shares at December 31, 2019 and 2018, respectively, at cost) Additional paid-in capital Retained earnings Reserves Equity attributable to the equity holders of the parent Non-controlling interests Total equity Total liabilities and equity (602) 34,826 22,883 (18,950) 38,521 1,962 40,483 87,908 (569) 34,894 25,611 (18,214) 42,086 2,022 44,108 91,249 2019 2018 Year Ended December 31, 2017 5,330 4,575 (2,391) Net (loss) income (including non-controlling interests) Items that can be recycled to the consolidated statements of operations Available-for-sale-investments: Gain arising during the period Reclassification adjustments for loss (gain) included in the consolidated statements of operations 497 497 354 755 Derivative financial instruments: Gain (loss) arising during the period Reclassification adjustments for (gain) loss included in the consolidated statements of operations (340) (1,004) (650) 353 1,108 28 (312) 177 Exchange differences arising on translation of foreign operations: Gain (loss) arising during the period Reclassification adjustments for gain included in the consolidated statements of operations (1,996) 2,025 (105) 72 (15) (2,011) (21) 2,004 Share of other comprehensive (loss) income related to associates and joint ventures (Loss) gain arising during the period Reclassification adjustments for loss (gain) included in the consolidated statements of operations (82) (239) 341 10 (72) (123) (362) 217 558 Income tax benefit (expense) related to components of other comprehensive income (loss) that can be recycled to the consolidated statements of operations 279 (274) 167 Items that cannot be recycled to the consolidated statements of operations Investments in equity instruments at FVOCI: Gain (loss) arising during the period Share of other comprehensive gain (loss) related to associates and joint ventures 28 (603) 10 (5) 38 (259) (608) 344 1,098 29 (32) 228 Employee benefits - Recognized actuarial (losses) gains Share of other comprehensive income (loss) related to associates and joint ventures Income tax (expense) benefit related to components of other comprehensive income that cannot be recycled to the consolidated statements of operations Total other comprehensive (loss) income Total other comprehensive (loss) income attributable to: Equity holders of the parent Non-controlling interests 42 (624) (1,575) 4,083 (666) 42 (1,478) (97) 4,037 46 (624) (3,015) (1,575) 3,755 4,083 8,658 Total comprehensive (loss) income Total comprehensive (loss) income attributable to: Equity holders of the parent Non-controlling interests Total comprehensive (loss) income (3,120) 105 (3,015) 3,671 84 8,605 53 3,755 8,658 113.95 Trade Time Trade Date 07:54AM Daily High 09/28/2020 Daily Low 113.95 52-week High 114.10 52-week Low Exchange 113.89 115.96 Open Prev. Close 101.04 BER Key Data Coupon in % 3.3000% Yield in % Duration - Modified Duration Accrued Interest - Currency USD Bond Data Country USA 4,000,000,000 USD Issue Volume Currency Issue Price Issue Date COUPON 99.65 2/6/2017 Coupon 3.300% Denomination 1000 Quotation Type Payment Type regular interest Special Coupon Type Maturity Date 2/6/2027 Coupon Payment Date 2/6/2021 Payment Frequency No. of Payments per Year 2.0 Coupon Start Date 8/6/2017 Final Coupon Date 2/5/2027 Floater? No Previous Close 207.82 1.579T Open 210.88 Market Cap Beta (5Y Monthly) PE Ratio (TTM) 0.89 Bid 209.19 x 1200 36.23 Ask 209.37 x 800 EPS (TTM) N N/A Day's Range 208.41 - 212.56 52 Week Range 132.52-232.86 Earnings Date N/A Forward Dividend & Yield 2.24 (1.08%) & Ex-Dividend Date Nov 18, 2020 Volume 9,490,499 Avg. Volume 34,954,928 1y Target Est N/A Moody's Rating Rating Rating Update AFFIRM Date of Rating 12/7/2017