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Assignment #3: Security Valuation and Macro-analysis You are to compute a five year average of the following ratios for these three companies: Coca...
Assignment #3: Security Valuation and Macro-analysis You are to compute a five year average of the following ratios for these three companies: Coca Cola, Disney, and Noble Energy. These three companies cannot be the companies that you used in your week five discussion. The ratios to complete are:Retention rateNet profit marginEquity turnoverTotal asset turnoverTotal assets/equityIndian River Citrus earned $6.00 per share last year and paid a dividend of $2.40 a share. Next year, you expect Indian River to earn $6.50 per share and continue its payout ratio. Assume you expect to sell the stock for $60 a year from now. If you require a 14% return on this stock, how much would you be willing to pay for it today?Currently, the dividend-payout ratio (D/E) for the aggregate market is 50 percent, the required return (k) is 8 percent, and the expected growth rate for dividends (g) is 3 percent. Compute the current earnings multiplierYou expect the D/E ratio to decline to 40 percent, but you assume there will be no other changes. What will be the P/E?Starting with the initial conditions, you expect the dividend-payout ratio to be constant, the rate of inflation to increase by 3 percent, and the growth rate to increase by 2 percent. Compute the expected P/E.
