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    Debt Outstanding and Value of a Company

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    Answer 1 Net income per share $3.80
    Last dividend (Do) $1.71
    Growth rate (g) 8%
    Discount rate (Rate of Return) 13%

    Rate of return = Expected dividend + Growth rate
    Current stock price

    Ans a: Projected Net income for next year $4.10
    Projected Dividend at 45% $1.85

    Ans b: Current stock price = $36.94

    Answer 2:
    Projected Net income for next year $4.47
    Growth rate 9%
    Dividend Ratio 40%

    Ans a Projected Dividend $1.79

    Ans b: Current stock price = $44.73

    Answer 3: Rate of Return (ROE) 18%
    Dividend payout ratio 60%

    Ans a Growth rate = 7.20%

    Ans b: Dividend payout ratio 50%

    Growth rate = 9.00%

    Answer 4: Earning per share $5.00
    Dividend payout ratio 35%
    Last dividend $1.75
    Discount rate 15%

    Growth Rate Earnings Dividend Present value
    Year 0 $5.00 $1.75
    Year 1 25% $6.25 $2.19 $1.90
    Year 2 20% $7.50 $2.63 $1.98
    Year 3 8% $8.10 $2.84

    Ans a: Projected dividends:
    D1 $2.19
    D2 $2.63
    D3 $2.84

    Ans b: Value of stock in year 2 = $40.50 $30.62

    Ans c: Value of stock today = $34.51

    In Million
    Answer 5: EBITDA $370.00
    Debt outstanding $670.00
    No of shares outstanding 20

    Value of the Company $2,035.00
    (average of 5 to 6 times of EBITDA)
    Less: debt $670.00
    Equity Value of the Company $1,365.00

    Value per share $68.25

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    https://brainmass.com/business/dividends-stock-repurchase-and-policy/debt-outstanding-value-company-472847

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    Solution Summary

    The expert examines debt outstanding and a value of a company.

    $2.19

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