Question

You are analyzing Superior Corp for Fidelity’s Super Growth ETF and have projected the dividends, share...

  1. You are analyzing Superior Corp for Fidelity’s Super Growth ETF and have projected the dividends, share buy-backs and future market cap for the next 4 years. Dividends/Buybacks are expected to be: $100/$200 (Year 1); $105/$218 (Year 2); $111/$240 (Year 3), and Market Cap $3,600 (Year 4). You have estimated Superior’s Required Return to be 8.5%. What is the estimated current market capitalization for Superior now? Before any calculations, draw a timeline. (Note: $ in Millions.)
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Please see the table below. Please be guided by the second column titled “Linkage” to understand the mathematics. The cell highlighted in yellow is your answer. Figures in parenthesis, if any, mean negative values. All financials are in $ million. Adjacent cells in blue contain the formula in excel I have used to get the final output.

Hence, the estimated current market capitalization = $ 3,423.34 million

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share...
•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share buybacks and dividends to grow 8%/year, and you believe the company could be sold for $2.4 billion at the end of Year 4 •Fill in Years 2 and 3 of the timeline below and calculate the company’s current market cap and share price given 100 million shares outstanding Timeline (in millions) Year 0 1 2 3 4 Dividends 45 BuyBacks 55 Div+Buybacks 100 Market...
This is a successful tech company. You have estimated the C of E to be 11%...
This is a successful tech company. You have estimated the C of E to be 11% and expect share buybacks and dividends to grow 8%/year, and you believe the company could be sold for $2.4 billion at the end of Year 4 Fill in Years 2 and 3 of the timeline below and calculate the company’s current market cap and share price given 100 million shares outstanding Timeline ($ in Millions)             Year                0          1          2          3          4             Dividends                   ...
1. You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of...
1. You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its stock over the next 12 months (Year 1). You expect dividends and share repurchases to grow 8% in Year 2 and 7% in Year 3. You also expect Tiger could be bought by a larger competitor at the end of Year 3 for $3.5 billion. If all payments are made at year end, and you have calculated the cost of equity to be...
You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its...
You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its stock over the next 12 months (Year 1). You expect dividends and share repurchases to grow 8% in Year 2 and 7% in Year 3. You also expect Tiger could be bought by a larger competitor at the end of Year 3 for $3.5 billion. If all payments are made at year end, and you have calculated the cost of equity to be 9.0%,...
4. Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe...
4. Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise has [many] or [few] good investment opportunities? B. Do you expect its net income to increase at a [fast] or [slow] rate? 5. You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect...
1. C&D Corp’s stock is selling for $45/share. You expect dividends to be $.57/share over the...
1. C&D Corp’s stock is selling for $45/share. You expect dividends to be $.57/share over the next year (Year 1), $.63/share in Year 2 and $.69/share in Year 3, and you anticipate the stock will be trading at $65/share at the end of Year 3. Draw a timeline assuming all cash flows occur at the end of each year. If you have estimated C&D Corp’s Cost of Equity to be 7.8%, what do you believe the true value of the...
Corporations: Organization, Stock Transactions, and Dividends Using the annual report of the corporation that you have...
Corporations: Organization, Stock Transactions, and Dividends Using the annual report of the corporation that you have been researching these weeks, take a look at that corporation's Statement of Stockholders' Equity. Tell us about the common stock that it issued including its outstanding shares. Also, take a look at a website, such as Yahoo Finance and find information about the corporation's price per share and whether or not it issues a dividend. Your corporation could have probably raised a lot of...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT