Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The beta for Hipersierra is 1,5. The return of the risk free asset is 4%, and the expected market return for the equity markets is currently estimated at 9,5%. Hipersierra Inc. Estimated that, under current market conditions, and given its business risk, the cost of its debt would be 11%. Its current Net Debt amounts to 30 million euros. The market Price of Hipersierra shares is 19 euros, and there are 5 million outstanding shares. For 2015, there are 14 mn euros of planned investments, both for Fixed assets (Capex) and Net Working Capital combined. After that, the investment plan would produce the forecasted Balance Sheets mentioned above. 1. Find out the Market Value of the Equity of Hipersierra using a DCF approach. For the Terminal Value use the perpetuity model. Please mention (there is no need to explain) the steps of the DCF model as you calculate it.
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Transcribed Image Text:The beta for Hipersierra is 1,5. The return of the risk free asset is 4%, and the expected market return for the equity markets is currently estimated at 9,5%. Hipersierra Inc. Estimated that, under current market conditions, and given its business risk, the cost of its debt would be 11%. Its current Net Debt amounts to 30 million euros. The market Price of Hipersierra shares is 19 euros, and there are 5 million outstanding shares. For 2015, there are 14 mn euros of planned investments, both for Fixed assets (Capex) and Net Working Capital combined. After that, the investment plan would produce the forecasted Balance Sheets mentioned above. 1. Find out the Market Value of the Equity of Hipersierra using a DCF approach. For the Terminal Value use the perpetuity model. Please mention (there is no need to explain) the steps of the DCF model as you calculate it.
Today is the 31st of December 2014, and Hipersierra Inc. presents the following forecast of its Income Statement and Blanace Sheet for the following 5 years. After this period, it estimates the business will grow at 3,5% per annum. Income Statement Sales COGS Gross Profit General expenses EBITDA Depreciation EBIT Interest expense PBT Taxes (35%) Net Income To Dividends To Retained Earnings Balance Sheet Gross Fixed Assets Inventory Accounts Receivable Cash Marketable Securities TOTAL ASSETS (mn euros) Accumulated Depreciation Long term Financial Investments Common Stock Reatined Earnings Financial Debt I/t (Pay-out) (mn euros) Financial Debt s/t Accounts Payable TOTAL LIABILITIES AND EQUITY 2015 185 120 65 35 30 10 20 4,6 15 5,39 10 4 2015 42 -10 4,5 15 15 3 0,5 70 22,0 12,0 20,0 4,0 12 70 2016 199 129 70 38 * 32 11 21 4,00 17 5,95 35,0% 11 5 45% 2016 6 53 -21 5,5 17 18 3 1,0 77 22,0 18,1 18,5 4,0 14 77 2017 215 140 75 41 34 11 23 2017 3,1 20 6,965 35,0% 13 6 46% 7 65 -32 5,5 19 21 4 1,0 84 21,0 25,0 17,5 4,0 16 83 2018 230 150 80 44 36 12 24 2,5 22 7,525 35,0% 14 7 50% 2018 7 77 -44 5,5 21 25 4 1,0 90 20,0 32,0 16,0 3,5 18 89 2019 247 161 86 47 39 13 26 2,2 24 8,33 35,0% 15 8 52% 2019 90 -57 5,5 23 28 5 1,0 96 20,0 39,4 13,0 3,0 20 95
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Transcribed Image Text:Today is the 31st of December 2014, and Hipersierra Inc. presents the following forecast of its Income Statement and Blanace Sheet for the following 5 years. After this period, it estimates the business will grow at 3,5% per annum. Income Statement Sales COGS Gross Profit General expenses EBITDA Depreciation EBIT Interest expense PBT Taxes (35%) Net Income To Dividends To Retained Earnings Balance Sheet Gross Fixed Assets Inventory Accounts Receivable Cash Marketable Securities TOTAL ASSETS (mn euros) Accumulated Depreciation Long term Financial Investments Common Stock Reatined Earnings Financial Debt I/t (Pay-out) (mn euros) Financial Debt s/t Accounts Payable TOTAL LIABILITIES AND EQUITY 2015 185 120 65 35 30 10 20 4,6 15 5,39 10 4 2015 42 -10 4,5 15 15 3 0,5 70 22,0 12,0 20,0 4,0 12 70 2016 199 129 70 38 * 32 11 21 4,00 17 5,95 35,0% 11 5 45% 2016 6 53 -21 5,5 17 18 3 1,0 77 22,0 18,1 18,5 4,0 14 77 2017 215 140 75 41 34 11 23 2017 3,1 20 6,965 35,0% 13 6 46% 7 65 -32 5,5 19 21 4 1,0 84 21,0 25,0 17,5 4,0 16 83 2018 230 150 80 44 36 12 24 2,5 22 7,525 35,0% 14 7 50% 2018 7 77 -44 5,5 21 25 4 1,0 90 20,0 32,0 16,0 3,5 18 89 2019 247 161 86 47 39 13 26 2,2 24 8,33 35,0% 15 8 52% 2019 90 -57 5,5 23 28 5 1,0 96 20,0 39,4 13,0 3,0 20 95
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