Kimberlyclark a household product manufacturer reported, Ask an Expert

Economics

KimberlyClark, a household product manufacturer, reported earnings per share of 3.2 $ in 2014 and paid dividends per share of $1.7 in that year. The firm reported depreciation of $315 million in 2014 and capital expenditures of $475 million. (There were 160 million shares outstanding). This ratio of capital expenditures to depreciation is expected to be maintained in the long term. The working capital needs are negligible. Kimberly-Clark will maintain a debt ratio of 16.39%. The firm is in steady state and earnings are expected to grow 7% a year. The stock had a beta of 1.05. (The Treasury bond rate is 6.25%. and the market risk premium 5.5%)

a. Estimate the value per share, using the Dividend Discount Model.

b. Estimate the value per share, using the FCFE Model.

c. How would you explain the difference between the two models and which one would you use as your benchmark for comparison to the market price?

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M91406076

Have any Question?Write your Review or question?

Related Questions in Business Economics

How does the percent below poverty level compare to the

How does the "percent below poverty level" compare to the national rate? What factors are causing your county poverty rate to differ from (or equal) the national poverty rate?

If a country lets say uk since brexit faces higher

If a country, lets say UK since Brexit, faces higher inflation and lower output than potential, which I am guessing is a adverse supply shock. What kind of FISCAL policy is needed to fix this issue? Explanation has to be ...

The below figure represents the potential outcomes of your

The below figure represents the potential outcomes of your first salary negotiation after graduation. Assuming this is a sequential-move game with the employer moving first, indicate the most likely outcome. Does the abi ...

A investment1 the following relates to the choices firms

A. Investment 1. The following relates to the choices, firms can make regarding the allocation of profits. (a) Outline the broad choice available to firms when deciding to allocate profits. (b) Do increases in profits in ...

Describe the difference between discrete and continuous

Describe the difference between discrete and continuous variables. Why do we need two different statistical tests to determine if differences in proportions are statistically significant verses differences in proportions ...

To investigate this a random sample of 18 bean leaflets was

To investigate this, a random sample of 18 bean leaflets was taken. The freezing temperatures were: -1.6 -0.9 -1.3 -2.7 -1.9 -2.2 -3.1 -2.3 -2.1 -0.2 -2.7 -2.9 -2.3 -3.8 -3.6 -4.3 -2.0 -3.3. Make a histogram of the data ...

Explain why the purchase and sale of used goods and of

Explain why the purchase and sale of used goods and of financial assets are not included in the calculation of GDP even though transactions in these items amount to billions of dollars daily.

A publisher reports that 61 of their readers own a

A publisher reports that 61% of their readers own a particular make of car. a marketing executive wants to test the claim that the percentage is actually above the reported percentage. A random sample of 310 found that 6 ...

Carefully explain how the price elasticity of demand affect

Carefully explain how the price elasticity of demand affect the revenue or profit of an organization?

A researcher conducts a well-designed study to compare a

A researcher conducts a well-designed study to compare a sample mean to a known population mean and uses alpha=.05, two-tailed. She finds a z-test of 1.98, p-value=.048. What should she conclude? a. The 95% confidence in ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert