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.
Cooperton Mining just announced it will cut its dividend from $4 to $2.50 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expecte
Q. High-fiber Diet for diverticular disease? For mild symptoms, a clear liquid diet is recommended. More serious cases may require hospitalization, intravenous feeding to rest
Q. Describe about Assets? Assets are things of worth owned by the business. They are as well called the resources of the business. Illustration includes machines, cash and buil
What are the elements of accounting assets Assets are items with money value which are owned by a business. Some instance are: cash, accounts receivable (selling services or g
Q. Example of supplies on hand? On 2010 December 4 Micro Train Company buy supplies for USD 1400 and recorded the transaction as follows Micro Train's two accounts reci
Q. What is current ratio in terms of accounting? The current ratio specifies the short-term debt-paying ability of a company. To find the current ratio we divide current assets
Question 1: (a) What do you understand by term offshore bank? (b) What are the benefits of providing and receiving banking services from an offshore bank? (c) Explain
Q. Illustrate lower-of-cost-or-market method? Procter & Gamble markets a broad range of paper, cleaning, beauty care, health care, food, laundry and beverage products around th
On January 1, 2012, Muller Co. borrowed cash from Washington Valley Bank by issuing a $100,000 face value 3-year installment note payable that carried a 7% interest rate. The note
A firm's __________ account is categorized as a current asset. A. equipment B. accounts payable C. bonds payable D. merchandise inventory
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