What is the continuing value (in dollars) of Carmody Ltd from the Dividend Discount Model (DDM)? 

 

B. What is the present value (in dollars) of continuing value of Carmody Ltd from the Dividend Discount Model (DDM)? 

 

C. What is the value per share (in dollars) of Carmody Ltd at the beginning of FY2023 from the Dividend Discount Model (DDM)? 

 

D. What is the continuing value (in dollars) of Carmody Ltd from the Residual Income Model (RIM)? 

 

E. What is the present value (in dollars) of continuing value of Carmody Ltd from the Residual Income Model (RIM)? 

 

F. What is the value per share (in dollars) of Carmody Ltd at the beginning of FY2023 from the Residual Income Model?

 

Using your valuation in the above question , answer the following questions. Clearly label your answers.

A. Do you obtain the same valuation or different valuations for Carmody Ltd from DDM and RIM?  Clearly explain your answer.

 

B. Provide a buy or sell recommendation for Carmody Ltd.

 

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The following information is available for a company, Carmody Ltd. Beta=0.8 Market Risk Premium (MRP) = 6% Risk free rate = 3.2% Terminal growth rate (g) = 4% Common stockholders' equity (CSE) at the beginning of FY2023 = $ 324m Stock price at the beginning of FY2023 = $28 Number of shares outstanding = 10m You have also obtained the following analyst consensus forecasts (in cents) for dividends and earnings for Carmody Ltd. FY2023 108.00 324.00 DPS EPS FY2024 116.64 349.92 The following information is available for a company, Carmody Ltd. Beta=0.8 Market Risk Premium (MRP) = 6% Risk free rate = 3.2% Terminal growth rate (g) = 4% Common stockholders' equity (CSE) at the beginning of FY2023 = $ 324m Stock price at the beginning of FY2023 = $28 Number of shares outstanding = 10m You have also obtained the following analyst consensus forecasts (in cents) for dividends and earnings for Carmody Ltd. FY2023 108.00 324.00 DPS EPS FY2024 116.64 349.92

Answer rating: 100% (QA)

A Continuing Value from the Dividend Discount Model DDM It is calculated as the expected dividends in the next year divided by the difference between ... View the full answer