Reference no: EM132875126
Assignment Questions
Questions
1. Assume I calculate g as ROE (1-p)/(1-ROE(1-p)) and the Ke from the CAPM. I replace both values in the formula PER =(ROE(1+g) -g)/ROE (Ke-g) but the PER I obtain is totally different from the one I get by dividing the quotation of the share to the earnings per share. Is it possible to interpret that difference as an overvaluation or undervaluation of that share on the market?
2. Is it possible to use a constant WACC in the valuation of accompanied with a changing debt?
3. Which method should we use to valuate young companies with high growth but uncertain futures? Two examples were Boston Chicken and Telepizza when they began.
4. Which of this method is better: discounting the Equity Cash Flow or discounting the Free Cash Flow?
5. Is it possible to value companies by calculating the present value of the EVA (Economic Value Added)? which are the necessary hypotheses so that such valuations provide similar results to discounting cash flows?
6. At times companies accuse investors of performing credit sales that they make their quotations fall. Is that true?
7. What impact does high inflation have on the value of a business?
8. Is it possible to use different WACCs in order to discount each year's flow? In which cases?
9. Is there any relationship between the net income and the flow to shareholders?
10. Is it true that very few Spanish mutual funds outperform their benchmark? it strange?
11. What is the significance and the utility of the following formula: Ke=DIV (1+g) p+g?
12. What is the market risk premium in Spain at the present moment -the number which I have to use in the valuations?
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