Solution to 5 question - The Gersin Gear Company is considering going public and is trying to determine its value based on its future div current EPS is

Solution to 5 question - The Gersin Gear Company is...

This preview shows page 1 - 4 out of 18 pages.

EPS9.14510.791112.7335 15.02553DPS 0.91451.079111.27335 1.502553Terminal valuePresent value0.831364 0.891826 0.956687 1.026264Value per share$ 159.43 The Gersin Gear Company is considering going public and is trying to determine its value bacurrent EPS is $7.75, and over the next 5 years they anticipate a payout ratio of 10% and ROtheir beta is estimated at 1.25, with a risk-free rate of 2.5% and a marker risk premium of period, they estimate their stable beta will be 1.00, with ROE of 12% and growth of 3%. (Riremain the same.) Using this information, determine the per-share va
Image of page 1
Year 5 Year 6 17.73012 18.26203 1.773012 13.69652 249.0276 155.7275 ased on its future dividend payments. Their OE of 20%. During this high-growth period, 6%. At the end of the 5-year high growth isk-free rate and market risk premium will alue for the company.
Image of page 2
Changes in net working capital613.333333 752.3556 922.8895 1132.078 1388.682The Gossman Guitar Company is trying to determine the current value its equity. As of its lof $2,500, with after-tax cash earnings of $120. The book value of its equity was $10,500 w$2,500, depreciation was $1,250, change in working capital was $500, and the cash flow frrisk-free rate of 3%, a beta of 1.4 and a risk premium of 5%. After a 5-year high growth percost of equity will remain the same. Given this information, what is the equity va
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 18 pages?

  • Fall '16
  • Fin
  • Finance, Financial Ratio, Generally Accepted Accounting Principles, Dividend yield

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture