EQ for 172 project 2

EQ for 172 project 2 - BGN BV NA 15.6 15.6 EPS 3.5 4.0...

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Beta = .85 T-bill = 5% Risk Prem = 9% T-Bill + (Beta x Risk Prem) = Discount Rate 5+(.85 x 9) = 12.65 EPS = 3.5 DPS = .33 (1 - .33) / (3.5) = .1914 Retention Ratio ROE = 23% Retention Ratio x ROE = Sustainable Growth Rate .1914 x 23 = 4.4029 = 4.4% D(0) = .74 Discount Rate (k) = 12.65 Sustainable Growth rate (g) = 4.4 V(0) = [D(0) – g] / (k-g) V(0) = (.74 – 1.044) / (.1265 - .044) = -3.6848 2008 (time 0) 2009 (VL) 2009 (CSR)
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Unformatted text preview: BGN BV NA 15.6 15.6 EPS 3.5 4.0 3.6540 * DIV .88 1.07 2.9676 ** END BV 15.6 17.4 16.2864 * * 3.5 x 1.044 ; 15.6 x 1.044 ** Plug = 3.6540 (16.2864 15.6) RIM P(0) = 15.60 + [(3.6540 (15.6 x .1265)) / (.1265 - .2)] = -7.2653 P(0) = 15.6 + [(4.0 (17.4 15.6)) / (.1265 - .20] = -14.332 DDM P(0) = (2.9676) / (.1265 - .2) = -40.3755 P(0) = (1.07) / (.1265 - .2) = -14.5578...
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