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At the end of 2018, the shares of Çatal Ltd, a farming company, traded at $20.50 each. In its 2018 annual report, Catal had reported book value of equity of $4,500 million with 2,300 million shares outstanding. You will use analysts forecasts as your expectations for future earnings. The forecasts for earnings-per-share are $1.50 for fiscal year 2019 and $1.65 for 2020. Çatal pays no dividend. Required: Estimate the per-share value of Çatal Ltd at the beginning of 2019 using the residual earnings model based on the analysts' forecasts, with an additional forecast that residual earnings will grow at the anticipated GDP growth rate of 2 percent per year after 2020. You expect a required return of 9 percent.

At the end of 2018, the shares of Çatal Ltd, a farming company, traded at $20.50 each. In its 2018 annual report, Catal had reported book value of equity of $4,500 million with 2,300 million shares outstanding. You will use analysts forecasts as your expectations for future earnings. The forecasts for earnings-per-share are $1.50 for fiscal year 2019 and $1.65 for 2020. Çatal pays no dividend. Required: Estimate the per-share value of Çatal Ltd at the beginning of 2019 using the residual earnings model based on the analysts' forecasts, with an additional forecast that residual earnings will grow at the anticipated GDP growth rate of 2 percent per year after 2020. You expect a required return of 9 percent.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter21: The Statement Of Cash Flows
Section: Chapter Questions
Problem 13P: Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and...
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At the end of 2018, the shares of Çatal Ltd, a farming company, traded at $20.50 each. In its 2018 annual report, Catal had reported book value of equity of $4,500 million with 2,300 million shares outstanding. You will use analysts forecasts as your expectations for future earnings. The forecasts for earnings-per-share are $1.50 for fiscal year 2019 and $1.65 for 2020. Çatal pays no dividend. Required: Estimate the per-share value of Çatal Ltd at the beginning of 2019 using the residual earnings model based on the analysts' forecasts, with an additional forecast that residual earnings will grow at the anticipated GDP growth rate of 2 percent per year after 2020. You expect a required return of 9 percent.
Transcribed Image Text:At the end of 2018, the shares of Çatal Ltd, a farming company, traded at $20.50 each. In its 2018 annual report, Catal had reported book value of equity of $4,500 million with 2,300 million shares outstanding. You will use analysts forecasts as your expectations for future earnings. The forecasts for earnings-per-share are $1.50 for fiscal year 2019 and $1.65 for 2020. Çatal pays no dividend. Required: Estimate the per-share value of Çatal Ltd at the beginning of 2019 using the residual earnings model based on the analysts' forecasts, with an additional forecast that residual earnings will grow at the anticipated GDP growth rate of 2 percent per year after 2020. You expect a required return of 9 percent.
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