100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
INV3701 Assignment 2 Semester 2 2023 $4.81   Add to cart
Quickly navigate to
Preview
  2.  
  3. University Of South Africa
  4.  
  5. Equity Asset Valuation

Exam (elaborations)

INV3701 Assignment 2 Semester 2 2023

1 review
 59 views  3 purchases
  • Course
  • Equity Asset Valuation
  • Institution
  • University Of South Africa
  • Book
  • Equity Asset Valuation

Whether used for exam preparation or as a supplementary learning aid, this document equips students with the tools they need to succeed academically in this unit

Preview 2 out of 14  pages

Document information

  • May 24, 2024
  • 14
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

Subjects

  • inv3701 assignment 2 semester 2

Connected book

book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:

More summaries for

  • Official© Solutions Manual to Accompany Equity Asset Valuation,Stowe
  • Equity Asset Valuation, Stowe - Downloadable Solutions Manual (Revised)
  • Equity Asset Valuation, Stowe - Solutions, summaries, and outlines. 2022 updated
All for this textbook (4)

Written for

  • University of South Africa
  • Equity Asset Valuation
All documents for this subject (3)

1  review

review-writer-avatar

By: mkhebesinomvuyo • 1 month ago

Good....I got good marks

reply-writer-avatar

By: GeniusGears • 1 month ago

Glad to hear you found the material helpful. Keep acing it

Seller

avatar-seller
GeniusGears

Reviews received

Content preview

INV3701
ASSIGNMENT 2 SEMESTER 2 2024

,
,Calculations
Current FCFF (1+growth rate) 9.2(1+0.06)
Total value of Greek manufacturing = (WACC−growth rate)
= (0.093−0.06) = 295.52 million

Total value of equity = Total value of firm – Total value of debt

Total value of equity = 295.52 – 132.5 = 163.02 million

,For any assistance Call/WhatsApp: 066 077 8000




Calculations

WACC = (Wd x Kd (1-Tax rate)) + (We x Ke)
WACC = (0.25 x 8.4) + (0.75 x 13.11) = 11.93%

Where, Ke = Rf + Beta (Rm – Rf)

Ke = 6.4% + 1.1 (12.5 – 6.4) = 13.11




Calculations
Expected FCFF
Value of the firm = (WACC−growth rate)

Since WACC is 13.11,
205 762
Value of firm = (0.1311−0.056) = R2 739 840

,Calculations

Terminal Value = E2 x Industry P/E
Terminal value = 2.40 x 28 = 67.20

,For any assistance Call/WhatsApp: 066 077 8000




Calculations

Normalised Earnings per share = Average ROE of the previous full cycle x Current book value per
share

Normalised Earnings = 0.32 x 14 = 4.48

,Calculations

EVA = NOPAT – WACC (TOTAL CAPITAL)

EVA = 120 – 0.0506 (88 + 94)
EVA = 110.79

,For any assistance Call/WhatsApp: 066 077 8000




Calculations

Required return = 6 + 1.25 (9.5) = 17.875%

,Calculations
ROE−g 0.32−0.04
P/B = r−g
= (0.1788−0.04) = 2.02
E
( )(1−b)(1+g) (0.19)(1.049007692)(1.04)
S
P/S = r−g
= 0.1788−0.04
= 1.49

To have the retention ratio we make use of the trailing P/E ratio
(1−b)(1+g)
Trailing P/E = r−g

1−b(1.04)
7.86 = 0.1788−0.04

1.090968 = (1-b)(1.04)

1 – b = 1.049007692

, For any assistance Call/WhatsApp: 066 077 8000




Calculations
(ROE−r )
Value of share = B0 + ( r−g
) x B0

0.2390−0.14
Value of share = 88 + ( 0.14−0.0580 ) 88 = R194.24

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller GeniusGears. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $4.81. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

71184 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$4.81  3x  sold
  • (1)
  Add to cart