All data is as of the end of the most recent period except for book equity,...

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Finance

All data is as of the end of the most recent period except forbook equity, which is beginning of most recent period.
Beginning period of book equity
$25,000
Net Income
$2,500
Depreciation and amortization
$1,010
Fixed capital investments
$1,500
Working capital investment
$875
Internet expense
$300
Tax rate
40%
Net borrowing
$250
Dividends
$1,000
Common share outstanding
1,000
Risk free rate
3.25%
Market risk premium
6.00%
Beta
1.5
Expected growth in FCFE (constant)
5.00%
a. Value the stock 9price per share) using the single stageGordon Growth Dividend Model. The growth in dividend needs to beestimated from the sustainable long term growth in dividends, whichyou can estimate using the data above.
b. Find FCFF and FCFE for the most recent period.
c. Value the stock (Price per share) using the single stageFCFE growth model. The growth rate in FCFE is expected to be 5%forever.

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3.9 Ratings (353 Votes)

a Value of Stock using Single Stage Gordon Growth Model Book Equity 25000 Net Income 2500 ROE r Net Income Book Equity 250025000 10 Dividend 1000 Dividend Payout Ratio Dividend Net Income 1000 2500 40 Retention Ratio b 1Dividend Payout Ratio 1040 060 ie 60 Growth Rate g See Answer

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All data is as of the end of the most recent period except forbook equity, which is beginning of most recent period.Beginning period of book equity$25,000Net Income$2,500Depreciation and amortization$1,010Fixed capital investments$1,500Working capital investment$875Internet expense$300Tax rate40%Net borrowing$250Dividends$1,000Common share outstanding1,000Risk free rate3.25%Market risk premium6.00%Beta1.5Expected growth in FCFE (constant)5.00%a. Value the stock 9price per share) using the single stageGordon Growth Dividend Model. The growth in dividend needs to beestimated from the sustainable long term growth in dividends, whichyou can estimate using the data above.b. Find FCFF and FCFE for the most recent period.c. Value the stock (Price per share) using the single stageFCFE growth model. The growth rate in FCFE is expected to be 5%forever.