Fi516

materials, practice exams, text hold up help and teach support. WEEK FI516 4 HOMEWORK ANSWER KEY problem 20 - 3 20-3 a. If one hundred dish outs are outstanding, hence we have the pursuance for Edelman: gain per share Dividends per share harbor value per share 2005 2010 $8,160 $12,000 4,200 6,000 90,000 b. development the quest two equations, the maturation rate for EPS and DPS can be determined. (1 + gEPS)5 EPS05 = EPS10. (1 + gDPS)5 DPS05 = DPS10. Kennedy Strasburg Edelman gEPS 8.4% 6.4 8.0 gDPS 8.4% 6.4 7.4 c. Based on the figures in Part A, it is obvious that Edelmans business line would not carry in the range of $25 to $100 per share. The small telephone number of shares outstanding has greatly inflated EPS, DPS, and book value per share. Should Edelman feat to sell its caudex based on the EPS and DPS above, it would have encumbrance finding investors at the economically warrant expense. d. Edelmans management would likely be wise to take apart the line o f work so that EPS, DPS, and book value were closer to those of Kennedy and Strasburg. This would bring the price of the stock into a more reasonable range. e. A 4,000-for-1 split would dissolvent in 400,000 shares outstanding. If Edelman has 400,000 shares outstanding, thus we would have the following: win per share Dividends per share Book value per share f. Kennedy Strasburg Edelman hard roe 15.

00% 13.64 13.33 2005 $2.04 1.05 2010 $ 3.00 1.50 22.50 g. Kennedy Strasburg Edelman Payout Ratio 2005 2010 50% 50% 50 50 51 50 All three companies seem to be following similar dividend policies, paying out about 50% of their earnings. h. D/A is 43% for Kennedy, 37% for Strasburg, and 55% for E delman. This suggests that Edelman is more r! isky, and then should sell at relatively low multiples. i. Kennedy Strasburg P/E $36/$4.50 = 8.00 $65/$7.50 = 8.67 These ratios are not consistent with g and ROE; based on gs and ROEs, Kennedy should have the higher P/E. Probably size, listing status, and debt ratios are offsetting g and ROE. j. The market prices of Kennedy and...If you inevitable to get a full essay, order it on our website: OrderEssay.net

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