00 p0 d1 100 2500 k g 012 008 b p3 3149 13 3 c

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 8.0% D1 = $1.00 P0 = D1 $1.00 = = $25.00 k − g 0.12 − 0.08 b. P3 = $31.49 13-3 C hapter 13 - E quity Valuation 16. a. k = 16% g = 6% D1 = $1.06 P0 = D1 $1.06 = = $10.60 k − g 0.16 − 0.06 b. Leading P0/E1 = 3.33 Trailing P0/E0 = 3.53 c. PVGO = P0 – a. V0 = E0 $3 = $10.60 – = −$8.15 k 0.16 D1 $2.06 = = $15.85 k − g 0.16 − 0.03 . 17. FI Corporation a. P0 = D1 $8.00 = = $160.00 k − g 0.10 − 0.05 b. ROE = 15% c. P0 = $120 . 13-4 C hapter 13 - E quity Valuation 18. Nogro Corporation a. D1 = $1 g = 0.10 Therefore: k= D1 $1 +g = + 0.10 = 0.20 = 20.0% P0 $10 b. : PVGO = P0 − E0 = $10 − $10 = $0 k c. . 19. Xyrong Corporation a. V0 = D 0 × (1 + g) $4 × 1.12 = = $101.82 k−g 0.164 − 0.12 b. P1 = $114.04 E(r) = $4.48 + $114.04 − $100 = 0.1852 = 18.52% $100 20. Before-tax cash flow from operations$2,100,000 Depreciation 210,000 Taxable Income 1,890,000 Taxes (@ 35%) 661,500 After-tax unleveraged income 1,228,500 After-tax cash flow from operations (After-tax unleveraged income + depreciation) 1,438,500 New investment (20% of cash flow from operations) 420,000 Free cash flow (After-tax cash flow from operations – new investment)$1,018,500 13-5 C hapter 13 - E qui...
View Full Document

Ask a homework question - tutors are online