prob sol 8-6 - P/E Above = Qualitative analysis or Short...

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PROBLEM 8-6 Given Levered equity beta 1.27 Risk free rate (10 year US Treasury bond) 5.02% Market risk premium 5.00% Estimated earnings for 2007 $5.69 0.0264620393 Dividend payout ratio 40.00% Stock price (12/07/06) $86.01 5-year growth rate estimate 10.00% Description Market Cap P/E Sector: Industrial Goods 16.606 14.94% 1.48% 0.87 50.471 5.40% 75.481 15.900 18.40% 1.41% 0.649 10.11 7.90% -134.900 Emerson Electric Co. $34.61B 19.276 23.72% 2.40% 0.494 4.257 9.54% 65.156 Parker-Hannifin Corp. 9.81B 14.150 18.16% 1.20% 0.308 2.298 8.25% 34.392 Roper Industries Inc. 4.44B 24.685 14.27% 0.50% 0.603 3.122 11.89% 232.735 Pentair Inc. 3.23B 17.943 11.56% 1.70% 0.485 1.974 4.48% 147.667 Walter Industries Inc. 2.19B 23.537 15.70% 0.30% 4.036 2.731 7.38% -10.682 Given Solution Legend a. = Value given in problem = Formula/Calculation/Analysis required
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Unformatted text preview: P/E Above = Qualitative analysis or Short answer required ROE Above = Goal Seek or Solver cell Dividend Yield Above = Crystal Ball Input LTD to Equity Below = Crystal Ball Output Price to Book Net Profit Margin Above Price to Cash Flow Above b. Estimated cost of equity 11.3700% Estimated growth rate 0.142344 DCF Estimate of Share Price $(79.46) c. Imputed growth rate 8.72% Impute growth rate 8.97% Return on Equity % Dividend Yield % Long-term Debt to Equity Price to Book Value Net Profit Margin Price To Free Cash Flow Emerson Comparison to Industry Below -- But higher than all comparison firms--probably an outlier is driving the industry average. using projected dividends using historical dividend yields...
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