Fundamentals of Financial Management (Concise 6th Edition)

280 Part 3 Financial Assets stock analyst thinks that the stock is fairly priced; hence, it is in equilibrium. She forecasted ou ...

Chapter 9 Stocks and Their Valuation 281 equals 10.0%, so its expected earnings for the coming year are (0.10)$1,000,000 " $100, ...

282 Part 3 Financial Assets In our example, we assumed that other things remain constant. This is often but not always a logical ...

Chapter 9 Stocks and Their Valuation 283 This is the same equation as the one we developed in Chapter 5 for a perpetuity, and it ...

284 Part 3 Financial Assets assumed average for the economy. The value of this! rm’s stock, like any other asset, is the present ...

Chapter 9 Stocks and Their Valuation 285 Pˆ 0! D 1 _______ (1 " rs)^1 " D 2 _______ (1 " rs)^2 "... " DN _______ (1 " rs)N " PˆN ...

286 Part 3 Financial Assets 9-7 VALUING THE ENTIRE CORPORATION 11 Thus far we have discussed the discounted dividend model for v ...

Chapter 9 Stocks and Their Valuation 287 The discounted dividend model assumes that the " rm is cur- rently paying a dividend. H ...

288 Part 3 Financial Assets HD also needs to increase its working capital, especially inventory. Putting everything together, HD ...

Chapter 9 Stocks and Their Valuation 289 Next, she discounted the Year 5 terminal value back to the present to! nd its PV at Ye ...

290 Part 3 Financial Assets While the dividend growth and the corporate valuation models presented in this chapter are the most ...

Chapter 9 Stocks and Their Valuation 291 should! nd the same intrinsic value using either model, but differences are often obser ...

292 Part 3 Financial Assets has a par value and a! xed dividend that must be paid before dividends can be paid on the common sto ...

Chapter 9 Stocks and Their Valuation 293 KEY TERMS Define the following terms: a. Proxy; proxy fight; takeover b. Preemptive rig ...

294 Part 3 Financial Assets next 2 years, at 13% the following year, and at a constant rate of 6% during Year 4 and thereafter. ...

Chapter 9 Stocks and Their Valuation 295 indefinitely. Smith has no debt or preferred stock, and its WACC is 10%. If Smith has 5 ...

296 Part 3 Financial Assets c. Suppose Dozier has $100 million of debt and 10 million shares of stock outstanding. What is your ...

Chapter 9 Stocks and Their Valuation 297 The market value of the company’s debt is $3 billion. 200 million shares of stock are ...

298 Part 3 Financial Assets STOCK VALUATION Robert Balik and Carol Kiefer are senior vice presidents of the Mutual of Chicago In ...

Chapter 9 Stocks and Their Valuation 299 Access the Thomson ONE problems through the CengageNOW™ web site. Use the Thomson ONE—B ...