ACC345 Homework template - Module 7

Asked by bizgrad
Dated: 4th Aug'18 05:32 PM
Bounty offered: $20.00
Case 11-3
a.
Use the accounting-based equity valuation model to estimate Colin's value at the beginning of year one.
(select choice from drop down in yellow cells)
Year Year Year Year Year Year Year
1 2 3 4 5 6 7
Net income 1,034 1,130 1,218 1,256 1,278 1,404 1,546
Book value, beginning 5,308 5,292 5,834 6,338 6,728 7,266 7,856
Residual income 6 pts
PV factor at 13% 6 pts
PV residual income - - - - - - -
Value= 5,308 1.5 pts
b.
Determine Colin's PB ratio using the results in (a). Colin's actual market-based PB is 1.95.
= 2 pts
What do you conclude from this PB comparison?
2 pts
c.
Determine Colin's PE ratio using the results in (a). Colin's actual market-based PE is 10.
= 2 pts
What do you conclude from this PE comparison?
2 pts
d.
If we expect Colin's sales and profit margin to remain unchanged after year 7 with a stable book value of $8,506, use the accounting-based
equity valuation model to estimate Colin's value at the beginning of Year 1.
Year Year Year Year Year Year Year Year
1 2 3 4 5 6 7 8+
Net income 1,034 1,130 1,218 1,256 1,278 1,404 1,546 1,546
Book value, beginning 5,308 5,292 5,834 6,338 6,728 7,266 7,856 8,506
Residual income 6 pts
PV factor at 13% 6 pts
PV residual income - - - - - - - -
Value= 5,308 1.5 pts
ACC345 Homework template - Module 7
Answered by bizgrad
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Dated: 4th Aug'18 05:32 PM
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ACC345_M7_7-1-Homework.docx.xlsx (18.32 KB)
Preview of ACC345_M7_7-1-Homework.docx.xlsx
Case     648CASE   Equity ValuationAfter     statement       these   for Colin     Book       of   capital is     13%       Abnormal   are expected     $0       Year   Use the  
module-7.xlsx (12.54 KB)
Preview of module-7.xlsx
is     What   you conclude     PB       PE   using the     (a)       PE   is 10     you       PE   If we     sales       to   unchanged