The second page complements the table on the first page.

Consider two stocks for two companies; ABC and XYZ companies. The relevant data for each ABC 495 0.03 2 0.07 XYZ 133 0.03 1.5 0.07 30 Current Price Risk free rate Beta Stock market premium Dividend in March 1990 Dividend in March 2020 Return on equity Payout ratio Earnings per share (EPS) Book value XYZ is a new company. It has not yet paid dividends 60 0.15 0.7 80 0.2 0 15 550 130 Calculation Questions on Stock Valuation (5 marks) For each company find the following. Enter only the final number. Include a separate document that shows your work. The necessary formulas are as follows: Discount rate; r = risk - free rate + B. stock market premium The growth rate of dividends (or EPS) Historical growth rate (geometric mean): 9 = (**)* -1 Sustainable growth rate: g = ROE*1- Payout ratio), where ROE Net income Equity Dividend Growth Model: P = Do(1+r) Residual income model: P = EPSof1+9)=Bol where EPS is earnings per share, and B is the book value of assets. r-g r-9 ABC XYZ Not available. Cannot compute without dividends = Discount rate (1) Historical growth rate of dividends Sustainable growth rate Fundamental value using dividend growth model with the historical growth rate Fundamental value using the dividend growth model with the sustainable growth rate Fundamental value using residual income growth model with the historical growth rate Fundamental value using the residual income growth model with the sustainable growth rate Not available. Cannot compute without dividends Not available. Cannot compute without dividends Not available. Cannot compute without dividends