Answered step by step
Verified Expert Solution
Question
1 Approved Answer
What is the intrinsic value of Diamond in 2017, assuming the firm will grow at the constant long-term growth rate going forward, immediately and indefinitely.
What is the intrinsic value of Diamond in 2017, assuming the firm will grow at the constant long-term growth rate going forward, immediately and indefinitely. Assume the current date is January 1, 2018.
What is the Intrinsic value of equity per share?
Is Diamond equity a Buy? Sell?, or Hold?
HINT: If the intrinsic value of the stock is within 5% of the market price and the ratios look reasonable, it would be considered a hold for purposes here. In practice, its a judgement call.
Balance Sheets for Diamond Construction Company 12/31/2014 12/31/201512/31/2016 12/31/2017 11,853 18,525 589,773 1,345,885 1,399,7201,455,709 1,513,938 1,864,1521,972,567 12,059,303 2,134,089 300,000 968,000 1,064,800 3,114,152 3,252,567 3,377,303 3,498,889 7,981 14,648 550,218 11,447 16,918 575,229 Cash 4,335 13,500 500,432 Marketable Securities A/R Inventories Total C.A. IP (net of amort) FA (net of depr Total Assets 450,000 800,000 400,000 880,000 350,000 A/P 300,557 501,233 200,445 1,002,235 368,195 304,499 208,363 881,057 1,500,000 1,450,000 1,400,000 1,350,000 300,000 967,832 924,6461,096,423 1,267,832 3,114,152 3,252,567 3,377,303 3,498,889 321,596 375,925 180,401 877,921 344,108 338,332 198,441 880,881 Accrued expenses Total C.L. Long-term debt Common stock Retained earnings Total equ Total L&E 300,000 311,917 611,917 300,000 624,646 300,000 796,423 Balance Sheets for Diamond Construction Company 12/31/2014 12/31/201512/31/2016 12/31/2017 11,853 18,525 589,773 1,345,885 1,399,7201,455,709 1,513,938 1,864,1521,972,567 12,059,303 2,134,089 300,000 968,000 1,064,800 3,114,152 3,252,567 3,377,303 3,498,889 7,981 14,648 550,218 11,447 16,918 575,229 Cash 4,335 13,500 500,432 Marketable Securities A/R Inventories Total C.A. IP (net of amort) FA (net of depr Total Assets 450,000 800,000 400,000 880,000 350,000 A/P 300,557 501,233 200,445 1,002,235 368,195 304,499 208,363 881,057 1,500,000 1,450,000 1,400,000 1,350,000 300,000 967,832 924,6461,096,423 1,267,832 3,114,152 3,252,567 3,377,303 3,498,889 321,596 375,925 180,401 877,921 344,108 338,332 198,441 880,881 Accrued expenses Total C.L. Long-term debt Common stock Retained earnings Total equ Total L&E 300,000 311,917 611,917 300,000 624,646 300,000 796,423Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started