Valuing Walmart:
1) How much do you think Walmart stock is worth as of February 2010 based on :
a) The dividend growth model with forecasted dividends for the next several years
plus sales of the stock.
b) The three stage dividend model
c) The P/E approac
Chapter 09 - Net Present Value and Other Investment Criteria
Chapter 09
Net Present Value and Other Investment Criteria
Multiple Choice Questions
1. A project has an initial cost of $27,400 and a market value of $32,600. What is the
difference between the
Problem 1-1A (Concluded)
Then, find the amount of owner investments during 2005:
Equity, December 31, 2004 .
Plus owner investments .
Plus net income .
Less owner withdrawals .
Equity, December 31, 2005 .
$42,000
?
12,000
0
$61,000
Thus, owner investments
Exercise 1-6 (10 minutes)
1.
2.
3.
4.
5.
G
A
C
F
D
Exercise 1-7 (20 minutes)
a.
Using the accounting equation:
Assets($123,000)
Thus:
$70,000
= Liabilities($53,000) + Equity(?)
= Equity
a. Using the accounting equation at the beginning of the year:
Assets
Exercise 1- 8 (10 minutes)
a.
b.
c.
$95,000
$67,000
$112,000
Exercise 1-9 (15 minutes)
Examples of transactions that fit each case include:
a.
Cash withdrawal (or some other asset) by the owner from the business;
OR, the business incurs an expense paid in
Problem 1-4A (15 minutes)
Amico
Balance Sheet
December 31, 2005
Assets. $90,000
Total assets. $90,000
Liabilities . $34,000
Equity. 56,000
Total liabilities and equity. $90,000
Problem 1-5A (15 minutes)
Trimark
Statement of Cash Flows
For Year Ended Decem
Exercise 1-17 (10 minutes)
A 1. Cash paid for wages
A
5. Cash paid on an account payable
C 2. Cash withdrawal by owner
C
6. Cash investment by owner
B 3. Cash purchase of equipment
A
7. Cash received from clients
A 4. Cash paid for advertising
A
8. Cash p
PROBLEM SET A
Problem 1-1A (40 minutes)
Part 1
Company A:
(a)
Equity on December 31, 2004:
Assets. $45,000
Liabilities . (23,500)
Equity. $21,500
(b)
Equity on December 31, 2005:
Equity, December 31, 2004 . $21,500
Plus owner investments .
5,000
Plus net
Problem 1-1A (Continued)
(c)
Net income for 2005:
Equity, December 31, 2004 . $12,500
Plus owner investments .
1,500
Plus net income .
?
Less owners withdrawals . (3,000)
Equity, December 31, 2005 . $13,500
Therefore, net income must have been $2,500.
Par
Chapter 25 - Option Valuation
Chapter 25 Option Valuation
Multiple Choice Questions
1. Travis owns a stock that is currently valued at $45.80 a share. He is concerned that the stock price may decline so he just purchased a put option on the stock with an
Valuing WalMart Stock
Presented by:
Cassie Canastra
Michael Askeland
Arafat Chowdhury
Sean Leary
Navia Nipa
Wal-Mart
1962: Sam Walton launched his first
store
Location : Bentonville, a backwater in
Arkansas,
Today : Worlds Largest Retailer
Located stores
Wal Mart Valuation
Wal-Mart 2010 Case Study
Dividend in perpetuity
For this model we use this formula :
Expected dividends (D) divided by the investors required rate of return (Ke)
minus the perpetual dividend growth rate(g).
P = D/(Ke-g)
The case tell us
Valuing WalMart Stock
Presented by:
Cassie Canastra
Michael Askeland
Arafat Chowdhury
Sean Leary
Navia Nipa
Wal-Mart
1962: Sam Walton launched his first
store
Location : Bentonville, Arkansas.
Today : Worlds Largest Retailer
Located stores in small towns
Looking Into WAL-MART
The Company
Every week, 100 million customers visit Wal-Mart stores worldwide, making it
the worlds largest retailers. A leader in the discount industry, Wal-Mart posted $218
billion in sales last year as it continued to specialize i
I.
Stock Valuation
The next step in evaluating Wal-Mart as an investment opportunity is to determine the
intrinsic value of their stock.
We will first look at Wal-Mart as it compares to other companies within the industry and
to the industry average. The
Security Analysis: WMT
Group 2
Report Date
11/29/2010
S&P
Value
1,187.76
Team Members:
Inez Boundurant
Jessica Cannon
Kelly Gibbons
Casey Graves
Ali Nasser
Last Price
Intrinsic
Economic
Value
Moat
$53.85
60.93
Wide
Recommendation
Hold
I.
The Theme
Wal-Mar
Security Analysis: WMT
Group 2
Report Date
11/29/2010
S&P
Value
1,187.76
Team Members:
Inez Boundurant
Jessica Cannon
Kelly Gibbons
Casey Graves
Ali Nasser
Last Price
Intrinsic
Economic
Value
Moat
$53.85
60.93
Wide
Recommendation
Hold
I.
The Theme
Wal-Mar
i
EXAM 1 (SAMPLE PROBLEMS)
.
Terry Austin is 30 years old and is saving for her retirement.
She is
planning on making 36 contributions to her retirement account at the
beginning of each of the next 36 years. The first contribution will be
made today (t =
Valuing Walmart:
1) How much do you think Walmart stock is worth as of February 2010 based on :
a) The dividend growth model with forecasted dividends for the next several years
plus sales of the stock.
b) The three stage dividend model
c) The P/E approac
St. Johns University Undergraduate
Student Managed Investment Fund
Presents:
Wal-Mart Stores, Inc.
Stock Analysis
Recommendation: Do Not Buy
Industry: Consumer Staples
Analysts: Dulce Cruz dulce.cruz16@gmail.com
Nelson DeSousa nelson.r.desousa@gmail.com
T