Case Mexico City: Fundamentos de Finanzas

Profesor: Samuel Mongrut

Sección A
Integrantes: Grupo 03

Lucero Alexandra Castro Acha

Ricardo Ernesto Guillén Velásquez
Brisa Belén Linares Guzmán
Alexandra Ramos Arroyo
Javier Fernando Zavala Perez
 1. Jane was advised by Suárez there was an interesting preferred share issu
Before buying it, Suárez recommended

a. If the current market rate of interest is 8%, what is the maximum price Jane should

Payment 3$
Rate of interest 8%
Time perpetuity

NPV 37.5 $

Current price 37.5

B. Suppose there is a call provision and the issuing company has the right to repurcha
change the estimate of the maximum price an insvestor should pay for the share?

Payment 3
Rate of interest 8%
Time 5
Precio de retorno 20

Valor del flujo de acciones 11.9781

Precio final de retorno 13.6117

Total Present Value 25.5898

Respuesta: Si se tiene en cuenta la condición de tener que comprar a 20 dólares al final de 5 años, el co
ting preferred share issue, which offered to pay $3 per year in perpetuity.
t, Suárez recommended a valuation.

mum price Jane should pay for the share?

as the right to repurchase the issue at a price of $20 in five years. Does this
d pay for the share?

dólares al final de 5 años, el costo de las acciones bajará a 25.5898 USD

 2. The firm "El Tiro" is enjoying a period of very rapid growth in sales, earn
dividend of $10 per share next year (year 1), and dividends are expected t
years ( years 2 and 3). Howevwe, such rapid growth cannot be sustained.
dividends are expected to grow steadily at 5% rate forever. The re

a. What is the current price of share of El Tiro?

Required Return Stock 10%

g 20% 20% 5% 5%
Periods 1 2 3 4 5
Expected dividends 10 12 14.4 15.12 15.876
Present Value (PV) 9.0909090909 9.9173553719 10.818933133 227.19759579
Variation 302.4

b. What is the expected price per share in year 1?

g 20% 20% 5% 5%
Periods 1 2 3 4 5
Expected dividends 10 12 14.4 15.12 15.876
Present Value (PV) 10.909090909 11.900826446 249.91735537
Variation in Time 302.4

c. What is the total expected rate of return in year 1 ?

Rate of Return
Asumiendo flujos intermedios 10.00%
Sin asumir flujos intermedios 6.11%

d. What are the expected prices and rates of return in years 2-4 ?

g 20% 20% 5% 5%
Periods 1 2 3 4 5
Expected dividends 10 12 14.4 15.12 15.876
Year 2 Variation 13.090909091 274.90909091
Year 3 Variation 302.4
Year 4 Variation 317.52

2 3 4
 Expected prices 288 302.4 317.52
Expected return 6% 5% 5%

Respuesta: Asumiendo que le ratio de retorno incluye flujos intermedios, la fórmula será (precio fina
 wth in sales, earnings, and dividends. El Tiro is expected to pay a
nds are expected to grow at a 20% rate during the following two
not be sustained. Beginning with the dividend in year 4, El Tiro's
ate forever. The required return on El Tiro stock is 10%.

5%
.....
Current Price
257.02479339

5%
.....
Expected price at year 1
272.727272727273

5%
.....
órmula será (precio final + flujos intermedios + precio inicial)/ precio inicial
 3. "La Sirena" Communications stock with an expected rate o

a. If this dividend is paid in perpetuity, what will be the value of the stock?

rate of return (r) 15%

dividends 2
Value of the stock 13.333333333

b. If this dividend grows by 10 percent a year in perpetuity, what will be the value of

rate of return (r) 15% P= Div /(r-g)

dividends (Div1) 2 P= 2/(15%-10%)
growth(g) 10%

Value of the stock 44

c. If this dividend grows by 10 percent a year for five years, 5 percent a year thereafte

1st Growth (5 years) -- g1 10%

2nd Growth (20 years) -- g2 5%
Ceases to grow -- g3 0%

5 years 20 years Perpetuity Value of Stock

8.77 14.09 1.73 24.588514497224
ock with an expected rate of return of 15% will pay a dividend of $2 this year.

e value of the stock?

tuity, what will be the value of the stock?

2/(15%-10%)

ears, 5 percent a year thereafter for 20 years, and then ceases to grow, what will be the value
this year.

will be the value of the stock?

 4. Sergio Tsuchikame and Sofia Shinmoto are founding partners of the co
commercialization of dental products, which has no debt. Gross income f
amounted to S/ 1.5 million and one expects that both will grow at an annu
million common shares outstanding, pays no taxes and pays all of its profit
per year, what is the price per share

Gross Income 3000000

Costs 1500000
Net Income 1500000

Annual Rate 5% Perpetuidad

Common Shares 1000000 acciones ordinarias
Return on equity 15% anual

Market Value = Dividendo0(1+Growth) / (COK - Growth)

Market Value 15750000 Price per share 15.75

Respuesta: El precio por accion seria de S/15.75 si se quiere un return of equity del 25%
 ng partners of the company "Rite Bite" dedicated to the production and
debt. Gross income for the previous year was S/ 3 million and total costs
will grow at an annual rate of 5% in perpetuity. Rite Bite currently owns 1
d pays all of its profits as dividends. If the required return on equity is 15%
is the price per share of "Rite Bite"?

equity del 25%

 5. "Rite Bite" is evaluating the possibility of exporting toothbrushes to Arg
15 million. In one more year the project will also require another investme
project, there will be a cash flow of S/ 6 million and it is expected that this w
both partners want to know the price per share of the company if they d
price per stock of the last question is th

*Los siguientes datos están en millones

r 15%
Gross Income (año anterior) 3
Total Cost 1.5
Annual Growth Rate 5%
Acciones en circulación 1

Año 0 1 2 3
Gross Income 3 3.1500 3.3075 3.4729
Costs 1.5 1.6 1.7 1.7
Net income (dividends) 1.5 1.6 1.7 1.7

Año 0 1 2 3
Cash Flow -15 -5 6 6
PV (Perpetuity) 40

Price per share of the company 31.184782609

Respuesta: En caso "Rite Bike" decida llevar a cabo este proyecto para exportar cepillos de diente a Argentina,
g toothbrushes to Argentina. The project requires an initial investment of S/
uire another investment of S/ 5 million. Then , two years after the star of the
is expected that this will be maintained in perpetuity. With this information,
he company if they decide to implement the project. Hint: Notice that the
the last question is the "cash cow" price.

.....

Price per share (cash cow price)

15.75

..... Net present value of growth opportunities (NPVGO)

15.4347826086957

cepillos de diente a Argentina, el precio por acción de la empresa debería ser 31.18478261