16.BOX, Inc., earned $4.55 per share last year. The firm had capital expenditures of $1.75 per share and depreciation expense of $1.05. BOX, Inc., has a target debt ratio of 0.25.
| High-Growth Period | Transitional Period | Stable-Growth Period | ||||||
Duration | 2 Years | 5 Years |
| ||||||
Earnings growth rate | 45% | Will decline 8% per year to 5% in the stable-growth period | 5% | ||||||
Growth in Capital Expenditures | 30% | Increases by 8% per year | Same $ amount as Depreciation | ||||||
Growth in Depreciation | 30% | Increases by 13% per year | Same $ amount as Capital Expenditures | ||||||
Change in Working Capital | Given Below | Given Below | $2.25 per share in Year 8 | ||||||
Shareholder Required Return | 25% | 15% | 10% | ||||||
| Yr 0 | Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 | Yr 6 | Yr 7 |
|
EPS | 4.55 | 6.60 | 9.57 | 13.11 | 16.91 | 20.46 | 23.12 | 24.27 |
|
Capital Expenditures | 1.75 | 2.28 | 2.96 | 3.19 | 3.45 | 3.73 | 4.02 | 4.35 |
|
Depreciation | 1.05 | 1.37 | 1.77 | 2.01 | 2.27 | 2.56 | 2.89 | 3.27 |
|
Change in WC | 0.90 | 1.10 | 1.40 | 1.60 | 1.80 | 2.00 | 2.20 | 2.10 |
|
FCFE |
|
| 7.63 | 11.01 | 14.67 | 18.08 | 20.62 | 21.89 |
|
What is the present value of BOX, Inc.?
A) $212.91.
B) $223.65.
C) $202.17.
D) $195.71.
17.The value of stock under the two-stage FCFE model will be equal to:
A) present value (PV) of FCFE during the extraordinary growth period plus the terminal value.
B) present value (PV) of FCFE during the extraordinary growth and transitional periods plus the PV of terminal value.
C) present value (PV) of FCFE during the extraordinary growth period minus the terminal value.
D) present value (PV) of FCFE during the extraordinary growth period plus the PV of terminal value.
18.SOX, Inc., expects high growth in the next 4 years before slowing to a stable future growth of 3 percent. The firm is assumed to pay no dividends in the near future and has the following forecasted free cashflow to equity (FCFE) information on a per share basis in the high-growth period:
| Year 1 | Year 2 | Year 3 | Year 4 |
FCFE | $3.05 | $4.10 | $5.24 | $6.71 |
High-growth period assumptions:
§
SOX, Inc.'s, target debt ratio is 40 percent and a beta of 1.3.
§
The long-term Treasury Bond Rate is 4.0 percent, and the expected equity risk premium is 6 percent.
Stable-growth period assumptions:
§
SOX, Inc.'s, target debt ratio is 40 percent and a beta of 1.0.
§
The long-term Treasury Bond Rate is 4.0 percent and the expected equity risk premium is 6 percent.
§
Capital expenditures are assumed to equal depreciation.
§
In year 5, earnings are $8.10 per share while the change in working capital is $2.00 per share.
§
Earnings and working capital are expected to grow by 3 percent a year in the future.
What is the present value on a per share basis for SOX, Inc.?
A) $64.24.
B) $70.49.
C) $77.15.
D) $81.67.
[此贴子已经被作者于2008-5-20 14:02:41编辑过]
答案和详解如下：
16.BOX, Inc., earned $4.55 per share last year. The firm had capital expenditures of $1.75 per share and depreciation expense of $1.05. BOX, Inc., has a target debt ratio of 0.25.
| High-Growth Period | Transitional Period | Stable-Growth Period | ||||||
Duration | 2 Years | 5 Years | | ||||||
Earnings growth rate | 45% | Will decline 8% per year to 5% in the stable-growth period | 5% | ||||||
Growth in Capital Expenditures | 30% | Increases by 8% per year | Same $ amount as Depreciation | ||||||
Growth in Depreciation | 30% | Increases by 13% per year | Same $ amount as Capital Expenditures | ||||||
Change in Working Capital | Given Below | Given Below | $2.25 per share in Year 8 | ||||||
Shareholder Required Return | 25% | 15% | 10% | ||||||
| Yr 0 | Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 | Yr 6 | Yr 7 |
|
EPS | 4.55 | 6.60 | 9.57 | 13.11 | 16.91 | 20.46 | 23.12 | 24.27 |
|
Capital Expenditures | 1.75 | 2.28 | 2.96 | 3.19 | 3.45 | 3.73 | 4.02 | 4.35 |
|
Depreciation | 1.05 | 1.37 | 1.77 | 2.01 | 2.27 | 2.56 | 2.89 | 3.27 |
|
Change in WC | 0.90 | 1.10 | 1.40 | 1.60 | 1.80 | 2.00 | 2.20 | 2.10 |
|
FCFE | | | 7.63 | 11.01 | 14.67 | 18.08 | 20.62 | 21.89 |
|
What is the present value of BOX, Inc.?
A) $212.91.
B) $223.65.
C) $202.17.
D) $195.71.
The correct answer was D)
Year 1 FCFE = Earnings per share - (Capital Expenditures - Depreciation)(1 - Debt Ratio) - (Change in working capital) (1 - Debt Ratio) = 6.60 - (2.28 - 1.37) (1 - 0.25) - (1.1)(1 - 0.25) = 5.09.
Year 8 FCFE = Earnings per share - (Capital Expenditures - Depreciation)(1 - Debt Ratio) - (Change in working capital)(1 - Debt Ratio) = 24.27*1.05 - 0 - (2.25) (1 - 0.25) = 23.79.
The Terminal Value (as of Year 7) = 23.79/ (0.10 - 0.05) = 475.80.
The value of BOX, Inc., stock would be equal to: 5.09/1.25 + 7.63/(1.25)2 + 11.01/[(1.25)2(1.15)1]+ 14.67/[(1.25)2(1.15)2]+ 18.08/[(1.25)2(1.15)3]+ 20.62/[(1.25)2(1.15)4]+ 21.89/[(1.25)2(1.15)5]+ 475.80/[(1.25)2 (1.15)5]=
4.07 + 4.88 + 6.13 + 7.10 + 7.61 + 7.55 + 6.97 + 151.40 = 195.71
17.The value of stock under the two-stage FCFE model will be equal to:
A) present value (PV) of FCFE during the extraordinary growth period plus the terminal value.
B) present value (PV) of FCFE during the extraordinary growth and transitional periods plus the PV of terminal value.
C) present value (PV) of FCFE during the extraordinary growth period minus the terminal value.
D) present value (PV) of FCFE during the extraordinary growth period plus the PV of terminal value.
The correct answer was D)
The value of stock under the two-stage FCFE model will be equal to the present value of FCFE during the extraordinary growth period plus the present value of the terminal value at the end of this period.
18.SOX, Inc., expects high growth in the next 4 years before slowing to a stable future growth of 3 percent. The firm is assumed to pay no dividends in the near future and has the following forecasted free cashflow to equity (FCFE) information on a per share basis in the high-growth period:
| Year 1 | Year 2 | Year 3 | Year 4 |
FCFE | $3.05 | $4.10 | $5.24 | $6.71 |
High-growth period assumptions:
§ SOX, Inc.'s, target debt ratio is 40 percent and a beta of 1.3.
§ The long-term Treasury Bond Rate is 4.0 percent, and the expected equity risk premium is 6 percent.
Stable-growth period assumptions:
§ SOX, Inc.'s, target debt ratio is 40 percent and a beta of 1.0.
§ The long-term Treasury Bond Rate is 4.0 percent and the expected equity risk premium is 6 percent.
§ Capital expenditures are assumed to equal depreciation.
§ In year 5, earnings are $8.10 per share while the change in working capital is $2.00 per share.
§ Earnings and working capital are expected to grow by 3 percent a year in the future.
What is the present value on a per share basis for SOX, Inc.?
A) $64.24.
B) $70.49.
C) $77.15.
D) $81.67.
The correct answer was C)
The required rate of return in the high-growth period is (r) = 0.04 + 1.3(0.06) = 0.118.
The required rate of return in the stable-growth period is (r) = 0.04 + 1.0(0.06) = 0.10.
The Present Value (PV) of the FCFE in the high-growth period is 3.05/1.118 + 4.10/(1.118)2 + 5.24/(1.118)3 + 6.71/(1.118)4 = 14.06.
The Terminal Price = Expected FCFEn+1/(r-gn) with FCFEn+1 = FCFE in year 5 = Earnings per share – (Capital Expenditures – Depreciation)(1- Debt Ratio) – Change in working capital (1 – Debt Ratio) = 8.10 – 0(1-0.4) – 2.00(1-0.4) = 6.90.
The Terminal Price = 6.90/(0.10-0.03) = 98.57.
The PV of the Terminal Price = 98.57/(1.118)4 = 63.09.
The value of a share today is the PV of the FCFE in the high-growth period plus the PV of the Terminal Price = 14.06 + 63.09 = 77.15.
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