help SHARE VALUATIONZambeef Products PLC is principally involved in the production, processing,distribution and retailing of beef, chicken, pork, milk, dairy products, eggs,stock feed and flour. The Group also has large row cropping operations(principally maize, soya beans and wheat), with approximately 7,787hectares of row crops under irrigation which are planted twice a year, and afurther 8,694 hectares of rainfed/dryland crops available for planting eachyear. The company is listed on the Lusaka Stock Exchange and the LondonStock Exchange. Historically the earnings of the company have been growingat a compound annual growth rate of 11% per annum, for the past five years.It is envisaged that the company will continue to grow at this rate for the next3years,and thereafter, grow at a constant rate of 3% forever. Assume thatthe most recent dividend per share paid is K0.35. The Book Value of Equityis K2 897 477 000, the Earnings Available for Ordinary Shareholders isK4 037 000 and the company currently has 300 580 000 ordinary shares inissue. Historically, the Lusaka Stock Exchange All Share Index (LASI)recorded an annual return of 18.5%. The risk-free rate as proxied by thetreasury bill yields is currently 14%, and assume that the company beta is0.24. Based on the information above, answer the following questions:i. Using the CAPM, calculate the required return for Zambeefii. Calculate the share Price of Zambeefiii. Calculate the market to book ratio of Zambeefiv. Calculate the Price to Earnings Ratio of Zambeefv. Assuming that the yields on the treasury bills reduces to 12 percent,and the beta of Zambeef increases to 0.4, calculate the new shareprice of Zambeef.

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Answered: i. Using the CAPM, calculate the…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 3MAD: Deere Company (DE) manufactures and distributes farm and construction machinery that it sells...

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i. Using the CAPM, calculate the required return for Zambeef ii. Calculate the share Price of Zambeef iii. Calculate the market to book ratio of Zambeef