Superfresh Co reported $10.981b revenue, $2.821b equity and $3.134b invested capital in the last annual report....

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Superfresh Co reported $10.981b revenue, $2.821b equity and $3.134b invested capital in the last annual report. The net profit margin has been stable in the past 10 years, fluctuating around 6%. The sales to capital ratio (i.e. the change in capital over the change in sales) is approximately 2. The reinvestments are financed with a fixed debt ratio of 10%. Superfresh has a beta of 0.95. High growth Stable growth 3% 1.8% 0.95 0.95 3% 3% 6% 6% 10% 10% Sales growth rate Beta Rf Net profit margin Fixed debt ratio capital-to-sales ratio The break-down of Superfresh's sales by regions is as follows. Moreover, the equity risk premium in North America is 5%, the relative standard deviations in the equity market of the rest three regions to the North American equity market are 1.25, 1.04, and 1.62 respectively. Risk-free rate to be used is 3%. Region Regional Sales % of Total Relative Std. to North America (billions) 1 1.25 1.04 1.62 North America East Asia 2 0.667 3.324 6.582 0.408 Total/average 10.981 Estimate the equity value of Superfresh. Oceania Others Sales 6.07% 30.27% 59.94% 3.72% 100% Superfresh Co reported $10.981b revenue, $2.821b equity and $3.134b invested capital in the last annual report. The net profit margin has been stable in the past 10 years, fluctuating around 6%. The sales to capital ratio (i.e. the change in capital over the change in sales) is approximately 2. The reinvestments are financed with a fixed debt ratio of 10%. Superfresh has a beta of 0.95. High growth Stable growth 3% 1.8% 0.95 0.95 3% 3% 6% 6% 10% 10% Sales growth rate Beta Rf Net profit margin Fixed debt ratio capital-to-sales ratio The break-down of Superfresh's sales by regions is as follows. Moreover, the equity risk premium in North America is 5%, the relative standard deviations in the equity market of the rest three regions to the North American equity market are 1.25, 1.04, and 1.62 respectively. Risk-free rate to be used is 3%. Region Regional Sales % of Total Relative Std. to North America (billions) 1 1.25 1.04 1.62 North America East Asia 2 0.667 3.324 6.582 0.408 Total/average 10.981 Estimate the equity value of Superfresh. Oceania Others Sales 6.07% 30.27% 59.94% 3.72% 100%

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To estimate the equity value of Superfresh Co we can use the Dividend Discount Model DDM with a stab... View the full answer