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?
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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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Given the financial statements and sales predictions for Wesney Corporation, create the pro forma statements, reconcile them, and determine the plug variable. Assume that every item on the balance sheet increases at the same rate as the sales increase.
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Given the financial statements and sales predictions for Wesney Corporation, how can we prepare the pro forma statements and determine the external financing needed, assuming costs and assets vary with sales while debt and equity do not? Make pro forma statements, then find the external financing needed.
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Given the financial statements and sales predictions for Camryn, Incorporated, and assuming that assets and costs are proportional to sales while debt and equity are not, what is the external financing needed for the next year? What is external financing required (EFN)?
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