Siam Sindhorn Essay

(Hint: A warrant’s exercise value is the difference between the stock price and the purchase price specified by the warrant if the warrant were to be exercised.)

of dividends, and a required return of 10 per cent per annum. The value of each

With the dawn of the 16th century began the worldwide interest for expanding ones empire as well as looking for new trade routes that would bring new product to different parts of the world more efficiently. At the head stone of these new advances were three of the most powerful nations in the world at this time. Spain, France and England These three nations, although they were all looking to occupy an area of the world that was relatively new for each of them, did not always share the same intentions. Because of this Spain, France and England shared some similar and some very different experiences. Dealings with the Native Americans, colonization and trade were just some of the issues where there was

The film opened with Mona doing a model shoot. She was listening to her demanding white photographer ordering her to have more provocative looks. This Mona, has conformed into the white supremacy, adapting preconscious beliefs, abstract to black culture, and stubborn towards black ideas. Mona had no connection to her inner being and had little insight on who she really was. While continuing to capture photos, Mona and her photographer decides to capture near the Fortress. She becomes distracted by a drummer who leads her inside of the Fortress. Mona is now suddenly locked in a dark room. When she does find light, she noticed that she is surrounded by other Africans who were bound and shackled

The change in the growth assumption has significant impact on the stock price. Under the high estimate of growth rate 236%, the new price per share is $107.56. Under the low estimate of growth rate 35%, the new price per share is $2.36.

a) How many shares will the firm have to issue, assuming they issue the new shares at the current price per share?

• Pe = D1/(re – g) = 700 / (0.11 – 0.05) = $11,667 • price per share = $11,667 / 1,000 = $11.67 3. Same facts as (2) above, except the 5% income growth rate (and beginning of year common equity to support it) are only expected for years 2 and 3. Then growth is expected to be zero and all income is expected to be distributed to shareholders for all future years. a. Compute D1, D2, D3, and Dt for all future years. • Keeping in mind that income is $1,100 in year 1, increases by 5% in years 2 and 3, and then remains constant for all future years; and keeping in mind that beginning of year 1 common equity is $8,000, increases by 5% at the beginning of year 2 and at the beginning of year 3, but does not increase at the beginning of year 4 and remains constant from that point forward, you should be able to compute: D1 = $700, D2 = $735, and Dt = 1,212.75 for D3 and all future years. b. Use the dividend discount (i.e., free cash flow to equity investors) valuation model to estimate the company’s current stock price. Pe = 700/(1+ 0.11) + 735/(1+ 0.11)2 + [1,212.75/0.11]/(1+ 0.11)2 = $10,175.31 and the price per share of common stock = $10,175.31 / 1,000 = $10.18. 4. Same facts as (3) above, except the growth rates are 5% for years 2 and 3 and then 3% perpetually for all future years. a. Compute D1, D2, D3 and the growth in D for all future years. • Keeping in mind that income is $1,100 in year 1, increases by 5% in years 2

stock price of $6.50, and a volatility of 40% (as indicated in the assignment question), yields values of

We added the market risk premium of 6% to the 4.60% because 6% is the rate that investors want above the risk free rate due to the risk of the investment. This equals 10.6% which is then multiplied by the beta of the company of 1.1. Beta is a measure of the stock’s volatility in relation to the market. A beta of 1.1 means that Worldwide Paper Company has slightly higher volatility than the market does. The total cost of equity then calculates to equal 11.2%. This tells us that given the risk taken in investing in the company, a shareholder should expect an 11.2% return.

It is determined that the company worth is $856,518 with a share price of $351.03 per value as per the discounting dividend cash flow valuation approach..In appraising the anticipated premerger performance of the company, the weighted average cost of capital is computed; the worth of the WACC for FVC is 9.2% as depicted in

Using the same market risk premium and risk free rate (5.5% & 4.62% respectively) given in the case, the averaged beta of 1.40, the pretax cost of debt of 7.65%, and the weighted average of debt & equity, the products & systems

If the company did go public, its share price should be $333.33 for per share with the constant growth scenario.

Therefore, the fair price of PERCS is PV(all quarterly dividends) + PV($31.5) Put Option(X=31.5, T=3). Performing this calculation, we obtain a fair price of $24.674 for PERCS. (See appendix for calculation)

The dividend policy has grown over the years. This may be so that the company projects itself as a less risky share and thus also gaining investors faith. The investors buy its shares and thus increase its demand. This helps to gives positive signals to the investors signalling that the company is stable and can generate earnings steadily. This hypothesis is gains standing from the dividend hypothesis theory.

Another objective that Mr David has is to change the structure of capital holders, considering that 47% of the shares are owned by brokers and security dealers, by transforming the company’s share into a less speculative one.