You are a junior sell-side analyst working for Deutsche Bank and you have been assigned to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are a junior sell-side analyst working for Deutsche Bank and you have been assigned to cover Dettol. On the back of extreme profits in the consumer hand sanitizer market, you believe that Dettol will pay $7.58 as its annual dividend one year from now at t=1. You believe that investors should require return of 28.7% from their investment in shares of Dettol. In addition, you forecast that Dettol's dividends should grow by 45.5% each year until t=18. After this time initial period of strong growth, you believe that a substantial amount of the general public will begin to return to their old filthy habits. This will lead Dettol's dividend growth to slow somewhat, growing only at rate of 17.9% per year until t=35. After this time, with the lessons of COVID-19 long forgotten, you believe that Dettol's dividends per share will decline at a rate of 4.0% per year in perpetuity. a) According to the dividend-discount model, what is the maximum price that you should be willing to pay for a share of Dettol? The value of per share is $ (Round your answer to the nearest cent) You are a junior sell-side analyst working for Deutsche Bank and you have been assigned to cover Dettol. On the back of extreme profits in the consumer hand sanitizer market, you believe that Dettol will pay $7.58 as its annual dividend one year from now at t=1. You believe that investors should require return of 28.7% from their investment in shares of Dettol. In addition, you forecast that Dettol's dividends should grow by 45.5% each year until t=18. After this time initial period of strong growth, you believe that a substantial amount of the general public will begin to return to their old filthy habits. This will lead Dettol's dividend growth to slow somewhat, growing only at rate of 17.9% per year until t=35. After this time, with the lessons of COVID-19 long forgotten, you believe that Dettol's dividends per share will decline at a rate of 4.0% per year in perpetuity. a) According to the dividend-discount model, what is the maximum price that you should be willing to pay for a share of Dettol? The value of per share is $ (Round your answer to the nearest cent)
Expert Answer:
Answer rating: 100% (QA)
Dettol Share Value using Dividend Discount Model DDM This scenario involves a multistage DDM with th... View the full answer
Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
Posted Date:
Students also viewed these finance questions
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Differentiate the function. f(x) = ln(x 2 + 10)
-
An electron and a proton move in circular orbits in a plane perpendicular to a uniform magnetic field B(vector). Find the ratio of the radii of their circular orbits when the electron and the proton...
-
If a function f is differentiable on the interval (a, b) then f is continuous on (a, b) In Problem, discuss the validity of each statement. If the statement is always true, explain why. If not, give...
-
Describe some of the more common criminal offenses that occur in healthcare settings.
-
Assume you are the manufacturer of modular office systems and furniture as well as office organization elements (desktop and wall organizers, filing systems, etc.). Your company has been asked to...
-
JL Lumber has a debt-equity ratio of .47. The firm's required return on assets is 11.8 percent and its current cost of equity is 14.23 percent. What is the firm's pretax cost of debt? Ignore taxes.
-
Determine the ERR (External rate of return) of the cash flows if external rate (e) is given as %19. Year Cash Flow 0 -3000 1 2000 2 4000 3 -1000 4 3000 5 4000 6 -5000 7 9000
-
2. What is the turnaround time for P2 using SJF scheduling a. 7 ms a. O b. 9 ms O c. 8 ms O d. 10 ms
-
Question 3 Scenario: XYZ Manufacturing Company Section B XYZ Manufacturing Company is a leading player in the consumer electronics industry. The company is known for its innovative products and has...
-
Please provide a general ledger, a trial balance, a income statement in a balance sheet With the giving information below. 11:46 < Date 2022 General Journal Particulars +0 Page: 14 P.R. Debit Credit...
-
A W21 x 57 of A992Gr50 steel column having length of 6 m and is fixed at both ends. (Gr50 steel = 50 ksi = 345 MPa = Fy) is used to carry a load of 900 kN dead load and 400 kN live load. Note: Use...
-
The manager of the customer service division of a consumer electronics company is interested in determining whether the customers who have purchased the washing machine made by the company over the...
-
The Street Division of Labrosse Logistics just started operations. It purchased depreciable assets costing $43.5 million and having a four-year expected life, after which the assets can be salvaged...
-
A stock has had returns of 8 percent, 26 percent, 14 percent, 17 percent, 31 percent, and 1 percent over the last six years. What are the arithmetic and geometric average returns for the stock?
-
The following selected tax information has been taken from the books and records of your client, Mr. Weilman. Non-capital loss arising in 2008 $33,000 Net capital loss arising in 2009 25,000 Listed...
-
Nina Diamond and Len Dirkfeld are married and have five children: Lindsay age 18, Trevor age 15, James age 7, Ben age 5, and Rebecca age 3. During 2011, they paid a nanny $250 per week for 50 weeks...
-
The following information relates to Leonard, a middle-management accountant, not engaged in negotiating contracts, of a public corporation, Peter Productions Ltd. which is located in Ontario. (A)...
-
What is the change in velocity of \((a)\) cart 1 (b) cart 2 in Figure 4.6? (c) What do you notice about your two answers? Figure 4.6 Velocity-versus-time graph for two identical carts before and...
-
(a) Are the accelerations of the motions shown in Figure 4.1 constant? (b) For which surface is the acceleration largest in magnitude? Figure 4.1 Velocity-versus-time graph for a wooden block sliding...
-
The \(x\) component of the final velocity of the standard cart in Figure 4.8 is positive. Can you make it negative by adjusting this cart's initial speed while still keeping the half cart initially...
Study smarter with the SolutionInn App