The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Question

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Answer 1

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

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Am I correct in my calculations: Suppose that in July 2013, Nike Inc. had EPS of $2.28 and a book value of equity of $13.01 per share. Average 29.84 2.44 Maximum +136% +70% Minimum −62% −63% Using the average P/E multiple from the table above, estimate Nike's share price. Estimate a value of stock using P/E valuation: 29.84 x 2.28 = 68.0352 = $68.04 What range of share prices do you estimate based on the highest and lowest P/E multiples in the table above? Highest P/E = $68.04 x 136% = $92.53 Lowest P/E = this is a negative % -62 and P/E does not have a negative number; it is invalid. Therefore, range would be $68.04 to $92.53 Using the average price to book value multiple in the table above, estimate Nike's share price. Estimate a value of stock using P/B book valuation: 2.44 x $13.01 = 31.7444 = $31.74 What range of share prices do you estimate based on the highest and lowest price-to-book…

The following information is collected from the current annual report of XYZ Ltd: Earning of firm Rs. 9, 00,000 Number of equity shares 1, 50,000 Return on Equity 22.5% Cost of equity 15%What should be the dividend payout ratio so as to keep the share price at Rs. 48 byusing Walter Model? Also, determine the optimum dividend payout ratio and themarket price of share at the optimum dividend payout ratio. What will themaximum and minimum share price under this model?

TNT Corporation's stock is currently selling at $36 per share. TNT reported total revenues of $5.26 billion over the past year, has a book value of equity of $2.9 billion, and has 296 million shares outstanding. Based on comparable firms, the appropriate P/S and P/B for TNT are 2.85 and 4.75, respectively. A. What is the stock's approximate intrinsic value based on the P/S multiplier? B. What is the stock's approximate intrinsic value based on the P/B multiplier?

Answer 2

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Answer 6

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 7

Chapter 9, Problem 25P

a.

Summary Introduction

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 8

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

Answer 9

b.

Summary Introduction

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

Answer 10

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 11

c.

Summary Introduction

To determine: The estimated share price of KCP using the average price book value.

Introduction:

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Answer 12

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Answer 13

d.

Summary Introduction

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CC Ch. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CC Ch. 9.3 - Prob. 3CC Ch. 9.4 - Prob. 1CC Ch. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.

The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Solution Summary: The author explains the range of the share price based on the highest and lowest P/E multiples.

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Want to see the full answer?

Chapter 9 Solutions

The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

Solution Summary: The author explains the range of the share price based on the highest and lowest P/E multiples.

To determine: The estimated share price of KCP. Introduction Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

To determine: The range of the share price based on the highest and lowest P/E multiples. Introduction: P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.

To determine: The range of the share price based on the highest and lowest price to book value multiples.

Want to see the full answer?

Chapter 9 Solutions

To determine: The estimated share price of KCP.

Introduction

Stock valuation of a constant growth: It is a method of calculating a company’s stock value; the valuation of a stock can be done based on the present value of the future cash flow or earnings on a constant growth.

To determine: The range of the share price based on the highest and lowest P/E multiples.

Introduction:

P/E ratio: It is the ratio of the share price of a company to the earnings of its per share of the company stocks.