ACC345 Homework template - Module 7

Dated: 4th Aug'18 05:32 PM
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 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
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Dated: 4th Aug'18 05:32 PM
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`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
`Preview of module-7.xlsx`
is     What   you conclude     PB       PE   using the     (a)       PE   is 10     you       PE   If we     sales       to   unchanged