An analyst produces the following series of annual dividend forecasts for company D: Expected (end of) year t+1 = 10 euros; Expected dividend (end of) year t+2 = 20 euros; Expected dividend (e year t+3 = 10 euros. The analyst further expects that company D dividend will grow indefinitely at 2 percent after year t+3. Company D cost of equity equals 10 percent. Under these assumptions, c the analysts estimate of company D equity value at the end of year t.

You have assigned the following values to these three firms: US Bancorp Praxair Eastman Kodak Price $34.55 37.80 50.35 Upcoming Dividend $ 2.35 1.36 2.00 US Bancorp required return Praxair required return Eastman Kodak required return Growth CAPM 6.20% Assume that the market portfolio will earn 13.30 percent and the risk-free rate is 6.00 percent. Compute the required return for each company using both CAPM and the constant-growth model. Note: Do not round intermediate calculations and round your final answers to 2 decimal places. 0.18 X % 0.24 X % 0.11 % 13.50 13.80 X Answer is complete but not entirely correct. Beta 1.67 2.49 0.64 Constant-Growth Model 0.16 X % 0.18% 0.17

You are given the three EPS estimates and the following estimates related to the market earnings multiple: EPS D/E Nominal RFR Risk premium ROE One shoul✓ -Select- a. Based on the three EPS and P/E estimates, compute the high, low, and consensus intrinsic market value for the S&P Industrials Index in 2018. Do not round intermediate calculations. Round your answers to the nearest cent. High intrinsic market value: $ Low intrinsic market value: $ underweight overweight Consensus intrinsic market value: $ b. Assuming that the S&P Industrials Index at the beginning of the year was priced at 2,050, compute your estimated rate of return under the three scenarios from Part a. Do not round intermediate calculations. Round your answers to one decimal place. Use a minus sign to enter negative rates of return, if any. Rate of return (optimistic scenario): Rate of return (pessimistic scenario): Rate of return (consensus scenario): Assuming your required rate of return is equal to the consensus,…

Mansukh