Finance I (102329) 2012-13
Joan Montllor/Maria Antonia Tarrazon
stock valuation
Earnings per share= 20
b= 0.4 D= 12
book value 75
rf = 0.05
RM= 0.15
beta of present invesments 1.5 E( R ) present 0.2
Value of present investments
1.5 E( R ) new 0.2 NPV new investments
Expected rate of return 0.3 g= 0.12
of new investments
GordonShapiro 150.00
PER 7.50 1/R 5.00
PVGO/Earnings 2.50
PER 7.50
book value 75.00
NPV present investments 25.00 25.00
Value present investments 100.00
PVGO 50.00 50.00
stock value 150.00
75.00
PVGO =present value of growth opportunities
beta of new investment
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
PVGO
NPV present
investments
book value
