Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Assorted fund, a U.K.-based globally diversified equity mutual fund, is considering adding Talisman Energy Inc. (Toronto Stock Exchange: TLM) to its portfolio. Talisman is an independent upstream oil and gas company headquartered in Calgary, Canada. Brian Dobson, an analyst at the mutual fund, has been assigned the task of estimating a fair value of Talisman. Dobson is aware of several approaches that could be used for this purpose. Talisman pays semi-annual dividends. The total dividends during 2006, 2007, and 2008 have been C$0.114, C$0.15 and C$0.175, respectively. These imply a growth rate of 32 percent in 2007 and 17 percent in 2008. Dobson is doing the analysis in January 2008 and the stock price at that time is C$17. He has estimated that the required rate of return on Talisman stock is 8.72 percent.Dobson believes that the growth rate will be 14 percent throughout the first stage of eight years. The dividend growth rate will be 7 percent thereafter.
Instead of using the estimated stable growth rate of 7 percent in the second stage, Dobson wants to use his estimate that eight years later Talisman's stock will be worth 17 times its earnings per share (trailing P/E of 17). He expects that the earnings retention ratio at that time will be 0.70.
a. What is the terminal value of stock based on the two-stage DDM model?b. What proportion of the total value of the stock is represented by the value of the second stage?c. What is terminal value of the stock based on the earnings multiple approach?d. What is the current value of the stock based on the second approach?e. Dobson is wondering what the consequences to stock price would be if the duration of the first stage was assumed to be 11 years instead of 8 years. Comment.
All relevant information and explanations about a business have been included in its financial reports
when discrepancies occured on financial documents,what consequences will arise?
I need help understanding my Accounting 205 class. Would some one please help me understand what I am having such a hard time comprehending.
Which of the following is NOT one of the key requirements for auditor independence? A. Auditors must disclose all other written communications between management and themselv
You received an email from Carl the operations manager from the California Container division. They produce packaging for cell phones. Carl understands that his product is an imp
Q. Example of lower-of-cost-or-market method? A company may perhaps apply LCM to each inventory item such as Monopoly each inventory class (such as games) or total inventory. T
Provided services on credit to Yamato P/L $5 900. How do we apply this in the t accounts
Cash flow information: Direct and indirect methods The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company's current accou
Why it is important for independent auditor to be a member of a professional body?
Q. What do you mean by partnership? A partnership is a non-incorporated business owned by two or more persons associated as partners. Habitually the same persons who own the bu
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd