Question

In: Finance

PT. ABC predicts its future dividend profile as follows: Year Dividend (Rp) 2017 30 2018 10...

PT. ABC predicts its future dividend profile as follows:
Year Dividend (Rp)
2017 30
2018 10
2019 20
2020 30
2021 35
2022 40
After 2022, ABC assumes constant dividend growth based on 8 percent return on equity (ROE), and 1
0 percent dividend payout ratio. Currently, ABC’s market beta is 1.2 and its market risk premium is 1
0 percent. Meanwhile, the spot price of LQ45 is Rp88, the 6-month LQ45 futures theoretical price is
Rp90.6155, and LQ45 yields 2 percent dividend. Estimate:
(a) Risk free rate (5);
(b) ABC discount rate (5);
(c) ABC intrinsic value in 2018 (10)
Please pick only one correct answer to each sub questions.

Solutions

Expert Solution

jeff jeffy answered 1 week ago
Next > < Previous

Related Solutions

A stock is expected to pay a dividend of $10 in one year. Its future annual...
A stock is expected to pay a dividend of $10 in one year. Its future annual dividends are expected to grow by 20% pa. The next dividend of $10 will be in one year, and the year after that the dividend will be $12 (=10*(1+0.2)^1), and a year later $14.4 (=10*(1+0.2)^2) and so on forever. Its required total return is 50% pa. The total required return and growth rate of dividends are given as effective annual rates. Calculate the payback...
A stock is expected to pay a dividend of $10 in one year. Its future annual...
A stock is expected to pay a dividend of $10 in one year. Its future annual dividends are expected to grow by 20% pa. The next dividend of $10 will be in one year, and the year after that the dividend will be $12 (=10*(1+0.2)^1), and a year later $14.4 (=10*(1+0.2)^2) and so on forever. Its required total return is 50% pa. The total required return and growth rate of dividends are given as effective annual rates. Calculate the payback...
Assume ABC Corp. pays the dividend of $4.55 this year. For the next 30 years, the...
Assume ABC Corp. pays the dividend of $4.55 this year. For the next 30 years, the firm's dividend will grow by 5.4%, then will grow by 4.7% each year afterwards. The required rate of return for the firm's industry is 10.8%. What is the present value of the firm's stock under the Dividend Discount Model?
ABC company is planning on increasing its annual dividend by 8 percent a year for the...
ABC company is planning on increasing its annual dividend by 8 percent a year for the next 3 years and then decreasing the growth rate to 3 percent per year forever. The company just paid its annual dividend in the amount of $0.20 per share. What is the current value of one share of this stock if the required rate of return is 10 percent?
The September 30, 2018 balance sheet of ABC Corporation disclosed the following information relating to its...
The September 30, 2018 balance sheet of ABC Corporation disclosed the following information relating to its receivables: Accounts Receivable (net of $18,000 allowance) $342,000 ABC prepares quarterly financial statements. The following occurred during the fourth quarter of 2018: 1. During the 4th quarter, ABC had credit sales of $2,600,000 and collections on accounts receivable (general) of $2,300,000. Uncollectible accounts totaling $19,000 were written off, and a $2,600 accounts receivable previously written off was collected (not included in the $2,300,000 of...
The September 30, 2018 balance sheet of ABC Corporation disclosed the following information relating to its...
The September 30, 2018 balance sheet of ABC Corporation disclosed the following information relating to its receivables: Accounts Receivable (net of $18,000 allowance) $342,000 ABC prepares quarterly financial statements. The following occurred during the fourth quarter of 2018: 1. During the 4th quarter, ABC had credit sales of $2,600,000 and collections on accounts receivable (general) of $2,300,000. Uncollectible accounts totaling $19,000 were written off, and a $2,600 accounts receivable previously written off was collected (not included in the $2,300,000 of...
Following are the inputs of ABC Corporation. Year 2015 2016 2017 2018 Growth Rate 8% 8%...
Following are the inputs of ABC Corporation. Year 2015 2016 2017 2018 Growth Rate 8% 8% 8% 4% EBIT (1-t) 200 220 240 130 Capex 100 110 120 50 Cost of Equity 10% 10% 10% 10% Cost of Debt 6% 6% 6% 6% Debt Ratio 20% 20% 20% 20% Return on capital 25% 25% 25% 15% Please calculate value of ABC corporation using discounted cash flow method. Please provide excel along with formula used
Price ($) Quantity 2016 10 200 2017 12 400 2018 30 450 Consider the data in...
Price ($) Quantity 2016 10 200 2017 12 400 2018 30 450 Consider the data in the table above for a 1-good economy (the only good produced and consumed) Given that the CPI for 2016 is 100, Compute the CPI inflation rates for the years 2017 and 2018. Determine the percentage change in GDP deflator for 2016-2017 and 2017-2018. Compare your results with your answers in (a) and justify. Explain three problems associated with using CPI to measure cost of...
The stock of ABC sells for $50 a share. Its likely dividend payout and end-of-year price...
The stock of ABC sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Dividend                        Stock Price Boom                                        $2.00                             $50 Good economy                            1.5                                46                                 Normal economy                         1.00                              43 Recession                                   .50                                34 a. Calculate the expected holding-period return and standard deviation of the holding period return. All four scenarios are equally likely. b. Calculate the expected return...
On January 1, 2017, ABC Company borrowed $100,000 from the bank. The loan is a 10-year...
On January 1, 2017, ABC Company borrowed $100,000 from the bank. The loan is a 10-year note payable that requires semi-annual payments of $12,000 every June 30 and December 31, beginning June 30, 2017. Assume the loan has a 20% interest rate, compounded semi-annually. Calculate the amount of the note payable at December 31, 2017 that would be classified as a current liability.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT