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
The book of Deven Verma could not be tallied. The account transferred the difference of Rs. 1.270 in the suspense account on the debit side. the following mistakes were found later
If my company sells 4000 shares of common stock for $86,400, how do I record this in the Journal?
Difference between Fica and federal income taxes Employers should file Form 940 with the IRS at the end of every calendar quarter. There are several rules about when to turn i
Write notes on 5 modern accounting techniques
Home Inc. is considering buying a new piece of equipment, which will cost $715,000 and has an economic life of 5 years, in order to make a new line of product. The company believe
What is Federal unemployment tax Federal unemployment tax (FUTA) requires the payment of taxes to provide benefits for workers during periods of temporary unemployment. This
SCENARIO In May of the current year, your employer received a PIER report from the CRA that identified Canada Pension Plan (CPP) contribution deficiencies for employees in the org
Q. Why we need book value? Book value -- total assets minus total liabilities. Book value also meansvalue of an asset as recorded on the company's financial reports or books. B
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: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd