Problem 4-21, Company Z Growth Opportunities
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
How much is the market paying for the growth opportunities?
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How much is the market paying for the growth opportunities?
Your numbers will vary.
Given a table of data including book equity, earnings per share, ROE, the payout ratio, dividends per share, and the dividend growth rate, estimate the stock value, the discounted value of P3, and PVGO. Finally, assume that competition will catch up with Growth-Tech: reestimate the stock value.
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Determine the share price and EPS/P ratio for Premian Partners.
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Determine the value of the concatenator business given a very large grid of inputs including Asset value, Free cash flows, and growth rates.
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Compute the return that investors are expecting, the growth in earnings given assumptions about ROE, and the rate of return given these assumptions.
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Determine the present value of the free cash flows to the firm and determine the price per share.
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Determine the value of the management contract and reevaluate the contract value given a different yield on the stocks.
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