Problem 30

amaton estimates for them h e m is 7 ponent, . Assume the values provided are from year the risk tree rate is 2.75 percent, and the sume the values provided are from year-end 2015. Also assume the risk-free rate is 2.75 percent, and the market risk premium is Dividends per share Return on equity Book value per share $ 2.04 9,50% $17.05 Sales 2015 value per share Average price multiple Forecasted growth rate Earnings $5.00 13.10 13.48% Cash Flow $6.60 9.42 $25.65 2.36 7.34% 11.41% Constant Perpetual Growth Model (LOI, CFA6) What are the sustainable growth rate and required return for Beagle Beauties? Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth model * Price Ratios (L04, CFAS) Using the PEP/CE and P/S ratios, estimate the 2010 share for Beagle Beauties 29. Residual Income Model (LO3, CFA9) Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate Share price for Beagle Beauties with the residual income model 30. Clean Surplus Dividend (LO3, CFA9) Use the information from Problem 29 and calculate the stock price with the clean surplus dividend. Do you get the same stock price as in Problem 297 Why or why not? amaton estimates for them h e m is 7 ponent, . Assume the values provided are from year the risk tree rate is 2.75 percent, and the sume the values provided are from year-end 2015. Also assume the risk-free rate is 2.75 percent, and the market risk premium is Dividends per share Return on equity Book value per share $ 2.04 9,50% $17.05 Sales 2015 value per share Average price multiple Forecasted growth rate Earnings $5.00 13.10 13.48% Cash Flow $6.60 9.42 $25.65 2.36 7.34% 11.41% Constant Perpetual Growth Model (LOI, CFA6) What are the sustainable growth rate and required return for Beagle Beauties? Using these values, estimate the current share price of Beagle Beauties stock according to the constant dividend growth model * Price Ratios (L04, CFAS) Using the PEP/CE and P/S ratios, estimate the 2010 share for Beagle Beauties 29. Residual Income Model (LO3, CFA9) Assume the sustainable growth rate and required return you calculated in Problem 27 are valid. Use the clean surplus relationship to calculate Share price for Beagle Beauties with the residual income model 30. Clean Surplus Dividend (LO3, CFA9) Use the information from Problem 29 and calculate the stock price with the clean surplus dividend. Do you get the same stock price as in Problem 297 Why or why not