Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Self-Test Problem
Given are the following possible dollar returns (dividends plus capital gains) over the
coming year from a $10,000 investment in General Motors common stock:
State of Economy
Probability
0.20
0.60
Return
$-1,000
1,500
2,500
Recession
Normal year
Boom
0.20
Convert the dollar returns to percentage returns and then determine the
a. Expected return
b. Standard deviation of returns
Consider the following security:
Brous Metalworks
Earnings Per Share, Time = 0
$2.00
Dividend Payout Rate
0.250
Return on Equity
0.150
Market Capitalization Rate
0.125
Required:
Using the information in the tables above, please calculate the sustainable growth rate, dividends per share, and intrinsic value per share. Then solve for the present value of growth opportunities.
(Use cells A5 to B8 from the given information to complete this question.)
Brous Metalworks
Sustainable Growth Rate
Dividends per share (Next Year)
Intrinsic Value
No-Growth Value Per Share
Present Value of Growth Opportunities (PVGO)
PLEASE SOLVE THIS QUESTION, ASAP:
Q: Suppose a company estimates following one year returns from investing in the common stock of Leopard Corporation:
Possibility of Occurrence
.1
.25
.1
.15
.1
.2
.1
Possible returns
15%
30%
15%
-10%
-5%
20%
10%
Required: Calculate Expected return & Risk {Standard Deviation)
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