Valuation Problem Set - Tommy (Chung Jin) Lee 173C...

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Tommy (Chung Jin) Lee 173C 3/14/2009 Valuation Problem Set 1. V = $5M T = 5 years I = $5M R = 50%, 30% X = 1M P/E = 20 a. $5 X (1.5)^5 = $37,968,750 5,000,000 X 20 = 100,000,000 37,968,750 / 100,000,000 = 0.3797 = 37.97% $5 X (1.3)^5 = $18,564,650 5,000,000 X 20 = 100,000,000 18,564,650 / 100,000,000 = 0.1856 = 18.56% b. 50% 1,000,000 [0.3797 / (1-0.3797)] = 612,123.17 shares P = 5,000,000 / 612,123.17 = $8.17 per share 30% 1,000,000 [0.1856 / (1-0.1856)] = 227,897.84 shares P = 5,000,000 / 227,897.84 = $21.94 per share c. 50% $12,000,000 X (1.5)^5 = 91,125,000 91,125,000 / 100,000,000 = 0.9112 = 91.12% 1,000,000 [0.9112 / (1-0.9112)] = 10,261,261.26 shares $5,000,000 / 10,261,261.26 = $0.49 per share 30% $12,000,000 X (1.3)^5 = 44,555,160 44,555,160 / 100,000,000 = 0.4456 = 44.56% 1,000,000 [0.4456 / (1-0.4456)] = 803,751.80 shares $5,000,000 / 803,751.80 = $6.22 per share
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2. 1,000,000 X (1-15%) = 850,000 50% $5 X (1.5)^5 = $37,968,750 5,000,000 X 20 = 100,000,000 37,968,750 / 100,000,000 = 0.3797 =
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This note was uploaded on 09/08/2010 for the course BUS 173C at San Jose State University .

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Valuation Problem Set - Tommy (Chung Jin) Lee 173C...

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