STOCK VALUATION

Dividend from Financial Statements:

Year (fill in what year you are using)

Cash Div/share ($)

Dividend Yield

Stockholder's Equity (in millions)

Stock Price

Dividend Yield - annual cash dividend per share of common stock divided by the market price of a share of the common stock. (Dividend yield = Annual Dividend/Current Stock Price)

Note: Current Stock Price is not part of the Financial Statements - calculated suing the formula for Dividend Yield

201#

201#

201#

1. Stock Valuation - The new dividend yield if the company increased its dividend per share by 1.75

Year (fill in what year you are using)

Cash Div/Share ($) +1.75

Dividend Yield

Stockholder's Equity (in millions)

Stock Price

Stockholder's Equity = Assets - Liabilities. This represents the ownership of a corporations. Owners are called stockholder because they hold stocks or share of the company. The main goal of every corporate manager is to generate shareholder value.

201# 1.75 0

201# 1.75 0

201# 1.75 0

2. The dividend yield if the firm doubled it's outstanding shares

Return on Equity - for this part we will modify and use return on investment instead.

Using the formula: Dividend (+1.75)/+[(new price-old price)/old price]

Note - for this part, you will need extra price from 2011

Year (fill in what year you are using)

Cash Div/Share ($)

Dividend Yield

Stockholder's Equity (in millions) -doubled

Stock Price

201# 0 0

201# 0 0

201# 0 0

Bonds are a long-term debt for corporations. By buying a bond, the bond-owner lends money to the corporation. The borrower promises to pay specified interest rate during the loans lifetime and at the maturity, payback the entire principle. In case of bankruptcy, bondholders have priority over stockholders for any payment distributions.

Bonds = Debt...............Bondholders = Lenders

Stock=Equity................Stockholders = Owners

3. The rate of return on equity (i.e., the cost of stock) based on the new dividend yield you calculated above

Year (fill in what year you are using)

Cash Div/Share ($) +1.75

Stock Price

Return on Investment

201# 1.75 CALCULATE ROI

201# 1.75 (Dividends + Capital gain)/ Divided by the original Price

201# 1.75 (D1 + (P1-P0)) / PO