The following information is available for a company, Hawken Ltd. Beta = 0.8 Market Risk Premium...
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The following information is available for a company, Hawken Ltd. Beta = 0.8 Market Risk Premium (MRP) = 8% Risk free rate = 3.6% Terminal growth rate (g)-5% After tax cost of debt = 5% Corporate tax rate = 30% Common stockholders' equity (CSE) at the beginning of FY2023 = $ 90m Net financial obligation (NFC) at the beginning of FY2023=$ 100m Stock price at the beginning of FY2023=$40 Number of shares outstanding = 10m You have also obtained the following analyst consensus forecasts (in cents) for dividends and earnings for Hawken Ltd. DPS EPS FY2023 FY2024 110 121 220 241 Assuming the company will achieve the steady state after FY2004, answer the following questions. Round-off your answers up to one place of decimal (For example, 1.56 should be rounded off as 1.6;1.55 should be rounded off as 1.6; 1.54 should be rounded off as 1.5; 10% should be written as 10). Do not use dollar sign ($), comma (,), or percentage (%) in your answers. A. What is the cost of equity for Hawken Ltd from CAPM? B. What is the weighted average cost of capital (WACC) for Hawken Ltd? C. What is the terminal value (in cents) of Hawken Ltd from the Dividend Discount Model (DDM)? D. What is the present value (in cents) of terminal value of Hawken Ltd from the Dividend Discount Model (DDM)? E. What is the value per share (in dollars) of Hawken Ltd at the beginning of FY2023 from the Dividend Discount Model (DDM)? F. What is the terminal value (in cents) of Hawken Ltd from the Residual Income Model (RIM)? G. What is the present value (in cents) of terminal value of Hawken Ltd from the Residual Income Model (RIM)? I H. What is the value per share (in dollars) of Hawken Ltd at the beginning of FY2023 from the Residual Income Model (RIM)?| The following information is available for a company, Hawken Ltd. Beta = 0.8 Market Risk Premium (MRP) = 8% Risk free rate = 3.6% Terminal growth rate (g)-5% After tax cost of debt = 5% Corporate tax rate = 30% Common stockholders' equity (CSE) at the beginning of FY2023 = $ 90m Net financial obligation (NFC) at the beginning of FY2023=$ 100m Stock price at the beginning of FY2023=$40 Number of shares outstanding = 10m You have also obtained the following analyst consensus forecasts (in cents) for dividends and earnings for Hawken Ltd. DPS EPS FY2023 FY2024 110 121 220 241 Assuming the company will achieve the steady state after FY2004, answer the following questions. Round-off your answers up to one place of decimal (For example, 1.56 should be rounded off as 1.6;1.55 should be rounded off as 1.6; 1.54 should be rounded off as 1.5; 10% should be written as 10). Do not use dollar sign ($), comma (,), or percentage (%) in your answers. A. What is the cost of equity for Hawken Ltd from CAPM? B. What is the weighted average cost of capital (WACC) for Hawken Ltd? C. What is the terminal value (in cents) of Hawken Ltd from the Dividend Discount Model (DDM)? D. What is the present value (in cents) of terminal value of Hawken Ltd from the Dividend Discount Model (DDM)? E. What is the value per share (in dollars) of Hawken Ltd at the beginning of FY2023 from the Dividend Discount Model (DDM)? F. What is the terminal value (in cents) of Hawken Ltd from the Residual Income Model (RIM)? G. What is the present value (in cents) of terminal value of Hawken Ltd from the Residual Income Model (RIM)? I H. What is the value per share (in dollars) of Hawken Ltd at the beginning of FY2023 from the Residual Income Model (RIM)?|
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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