Chapter 18 —— Equity Valuation Models 1. Models to uncover mispriced securities Fundamental analysts: use information concerning the current and prospective profitability of a company to assess its fair market value 2. Quantitative tools: dividend discount model (DDM) 3. P/E (price-earnings ratio) 4. Free cash flow models 1. Valuation by Comparables P/E, price-to-book value, price-to-sales value, price/cash flow ratio Comparative valuations ratios are used to assess the valuation of one
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50,234 D. 51,000 E. 51,234 3. Find the present value at time 0 of regular payments of $50 at times 25 years, 26 years, and so on, with the last payment at time 40 years. Use an annual effective interest rate of 12% A. 22.97 B. 23.71 C. 24.27 D. 25.09 E.26.00 4. $100 per year is received continuously from time 5 years to time 8 years. Assuming an annual effective interest rate of 4.5%, what is the accumulated value at time 10 years? A. 250.74 B. 275.66 C. 300.12 D. 325.50 E. 350.22
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20/09/2011 4.1 The Timeline Chapter 4 The Time Value of Money • A timeline is a linear representation of the timing of potential cash flows. • Drawing a timeline of the cash flows will help you visualize the financial problem. Copyright © 2011 Pearson Education. All rights reserved. Copyright © 2011 Pearson Education. All rights reserved. 4-2 4.1 The Timeline (cont’d) • Assume that you made a loan to a friend. You will be repaid in two payments, one at the end of each year over the
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allocated in time. • Outcomes of financial decisions are spread out over time and not known with certainty in advance • Three key concepts in finance are : Time value of money Asset Valuation (stocks, bonds, derivatives,...) Risk management 1.1: Interest and return • Income almost never matches consumption desires exactly. Either one will need to borrow to purchase more than one can afford or save excess income. • Costs / benefits of financial decisions are spread over time. So one needs
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function work? What are its uses? 13. Write down the functions of PMT, PPMT, IPMT. How can you use these functions to prepare a loan amortization schedule? 14. Write down the function of IF Statement, AND, OR and XOR. 15. Describe different Time functions. What are its uses? 16. What is What If Analysis? Describe different kind of what if analysis. What are its uses? 17. What do you mean by Sensitivity Analysis? What are its uses? 18. Describe difference between What if analysis
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$250 annuity due will be lower than the PV of a similar ordinary annuity. b. A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage. c. A bank loan's nominal interest rate will always be equal to or greater than its effective annual rate. d. If an investment pays 10% interest, compounded quarterly, its effective annual rate will be greater than 10%. e. Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly
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Hensley Real Estate and Appraisal Services Annual Strategy Plan Jo Student BUS/470 March 18, 2012 Dr. David A. Smith STRATEGIC PLAN 2 Table of Contents Executive Summary.................................................................................... ............ 3 Company Background and Milestones............................................................................... 3 Part 1: The Business..........................................................................................
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BUSINESS 111 FALL 2011 NON-BBA FINAL EXAM REVIEW GUIDE Final Exam Date: FRIDAY, DECEMBER 9TH, 2011 Exam Time for WLU Students: 7:00 p.m. – 9:30 p.m. Exam Time for UW Students: 7:30 p.m. – 10:00 p.m. Writing Locations posted at https://www.wlu.ca/~mibrahim/exams/FALL2011/BUSINESS.html Important Notice: If a student cannot write a business or economics final exam as scheduled, they must submit a "Petition for Exception to Academic Regulations" form to Ms Lee Leeman, Student and
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Problem the organization is facing Inventory problems the hospital is facing are the inability to track in and out properly all of the items currently on hand. There have been several instances that have occurred where the stock in hand and the stock listed in the computer varied. The difference in stock is a result of possible theft, mismanagement, or inaccurate record keeping. Currently the organization is relying on its computer system to have an accurate log of all medication or stocks received
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Mini Case A) For finding the CBS bond value I solved using excel formula PV Rate (Required rate) 6% Nper 10 Pmt 76.25 FV (face value of bond) 1000 CBS bond Years left to maturity Nper 10 Annual interest payment Pmt $ 76.25 Present value PV -986 Future value FV $ 1,000.00 Required rate 6% Expected rate 7.83% Value $
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