Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 26P
Suppose that In January 2006, Kenneth Cole Productions had sales of $518 million, EBITDA of $55.6 million, excess cash of $100 million, $3 million of debt, and 21 million shares outstanding.
- a. Using the average enterprise value to sales multiple in Table 9.1, estimate KCP’s share price.
- b. What range of share prices do you estimate based on the highest and lowest enterprise value to sales multiples in Table 9.1?
- c. Using the average enterprise value to EBITDA multiple in Table 9.1, estimate KCP’s share price.
- d. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples In Table 9.1?
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Suppose that in July 2022, Nike Inc. had EBITDA of $6,561 million, excess cash of $12,944 million, $12,541 million of debt, and 1,473.2 million shares outstanding.
a. Using the average enterprise value to EBITDA multiple from the table here,, estimate Nike's share price.
b. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples in the table above?
a. Using the average enterprise value to EBITDA multiple in the table, estimate Nike's share price.
Nike's share price for this case will be $ 52.78. (Round to the nearest cent.)
b. What range of share prices do you estimate based on the highest and lowest enterprise value to EBITDA multiples in the table?
The highest price will be $106.27. (Round to the nearest cent.)
Data table
TABLE 10.1
Stock Prices and
Multiples for the
Footwear Industry
(excluding Nike), July
2022
Name
Nike, Inc.
Adidas AG
Under Armour
Puma AG
Skechers U.S.A.
Wolverine World Wide
Steven Madden, Ltd.
Rocky Brands,…
Suppose that in January 2006, Kenneth Cole Productions had EPS of $1.67 and a book value of equity of $8.83 per share, a price to book ratio of 2.84 and P/E ratio 15.01.
Estimate KCP’s share price based on PE ratio.
Estimate KCP’s share price based on price to book ratio.
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity.
You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant).
Based on the DCF approach, what is the cost of common from retained earnings? Please show formula and answer
Chapter 9 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CCCh. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CCCh. 9.3 - Prob. 3CCCh. 9.4 - Prob. 1CCCh. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.
Ch. 9.5 - Prob. 2CCCh. 9 - Assume Evco, Inc., has a current price of 50 and...Ch. 9 - Anle corporation has a current price of 20, is...Ch. 9 - Suppose Acap Corporation will pay a dividend of...Ch. 9 - Prob. 4PCh. 9 - NoGrowth Corporation currently pays a dividend of...Ch. 9 - Summit Systems will pay a dividend of 1.50 this...Ch. 9 - Prob. 7PCh. 9 - Canadian-based mining company EI Dorado Gold (EGO)...Ch. 9 - In 2006 and 2007, Kenneth Cole Productions (KCP)...Ch. 9 - DFB, Inc., expects earnings at the end of this...Ch. 9 - Cooperton Mining just announced it will cut its...Ch. 9 - Procter and Gamble (PG) paid an annual dividend of...Ch. 9 - Colgate-Palmolive Company has just paid an annual...Ch. 9 - Prob. 14PCh. 9 - Halliford Corporation expects to have earnings...Ch. 9 - Prob. 16PCh. 9 - Maynard Steel plans to pay a dividend of 3 this...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Suppose that In January 2006, Kenneth Cole...Ch. 9 - In addition to footwear, Kenneth Cole Productions...Ch. 9 - You read in the paper that Summit Systems from...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33P
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