Present Valuation of Financial and Banking Institution-

Post the results of the valuation that you prepared of a financial and banking HSBC.

What are the results of the valuation analysis?What is the range of estimated value for 1 standard deviation above and below your best estimate?

What special problems were encountered in the valuation?

Challenges of Firms With Negative, Low or Abnormal Earnings-What are some of the challenges, issues and *remedies* associated with valuing firms with negative, low or otherwise abnormal earnings?

Cost of Equity =2.31%

Return on equity =8010.69%

Payout ratio =0.00%

Expected growth rate =8010.38%

Base yearExpected Growth Rate

Net income$3,898.00

Payout ratio0.00%

Dividends$0.15

Cost of Equity2.31%

Discount factorPresent Value

Growth Rate in Stable Phase =0.32%

Payout Ratio in Stable Phase =92.14%

Cost of Equity in Stable Phase =4.07%

Value of equity at end of growth period =$607,558,736,040,863,000,000.00

PV of dividends in high growth phase =$32,090,539,229,837,800,000.00

PV of Terminal Price =$459,418,646,215,319,000,000.00

Value of equity =$491,509,185,445,157,000,000.00

Value of equity per share =$120,763,927,627.80

Current stock price =$30.03Price as % of value0.00%

Answer rating: 100% (QA)

Solution The results of the valuation analysis for HSBC are as follows The estimated value of equity is 491509185445157000000 The estimated value of e... View the full answer