Solve

Exercise 3 (Implied Equity Risk Premium /2 marks) The NASDAQ 100 index is at 15,150. The expected dividends and cash flows next year on the stocks in the index are expected to be 8.32% of the index. If the expected growth rate in dividends and cash flows over the long term is expected to be 4%. 11. The implied expected return is equal to: a- 12.32% b- 7.02% - 8.32% d- 9.82% -... 12. If the current T. Bill rate is 2.5% and the ten-year T. Bond rate is 5.3%, the implied equity risk premium is equal to: a- 12.32% b- 7.02% C- 8.32% d- 9.82% Exercise 4 (Valuation Using Guideline Publicly Traded Companies /5 marks) To evaluate the ABC firm using the market approach, you have collected the following information (in #): Comparable firm XYZ Subject Firm ABC Stock price 45 Number of shares 6,500 Cash 12,000 20,000 EBIT 76,500 85,750 Depreciation Amortization 13,500 16,000 Market value of debt 25,000 35,000 Tax rate 30% 30% 13. The P/EBITDA multiple of the "XYZ" firm is equal to : 3.58 b. 3.41 c. 3.25 d. 3.82 . . .. . The value of the "ABC" firm based on the P/EBITDA multiple is equal to (in #): 0,687.50 b. 345,687.50 c. 313,687.50 d. 278,687.50 4