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    Ahsan Kamran
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    solve

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    solve

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    © All Rights Reserved
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    14 views7 pages

    Stock Valuation HA Solutions

    Uploaded by

    Ahsan Kamran
    solve

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 7
    SF3_ a. (1) Calculate the PV ofthe dividends paid during the supesnormal growth period: 1.1 S00(1.15) = $1.3225, $1.3225(1.15) = $1,320. Dy = $1.52090.13) ~ $1.7186. PUD = $1.3225(0.8929) + $1.5209(0.7972) + S1-7186(0.7118) E1809 + 81.2125 + $1.2253 SH6167 = $3.62 ) Find the PV of Snyder's stock price at the end of Year 3 be Pe Date PY B, = $30.36(0.7118) (8) Sam the two components to find the value af the stock today: Py = $3.62 + $21.61 = 82525, Alternatively, the cast flows can be placed om a tne line as follows: 52.0803 Enter the cash flows inc she cash flow rites, = 12, nd pres the NPV key to obtain Pea S525 6 By = st szoqoso26) + s1.718602072) + 10590.707 = Sissw0+ 1.3701 + $242030 269311 ~ $26.93. (Caeser solution: $26.98) 1 718600892) +. $30.36(08929) 15335 + S27 088 B9 ~ 828.68 (Caesar soetion $28.64) © Your Dividend Vikd + apt Gi vet 51.3205 52693 — $25.23 sa5z3 7 524% oo oe oe + SB $2693 ge, 12% 325 600% = me st sta a. Thisis not necessarily true. Because G plows back two-thirds ofits earnings, its growth rate should exceed that of D, but D pays higher dividends ($6 versus $2). We cannot say which stock should have the higher price, '. Again, we just do not know which price would be higher.

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