I am pretty sure we would not have seen this 5 years ago - Posting for Tutorial Help from "Student of Fortune"

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salbundy

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Questions Asked: 1

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$17.00

Forecasting and Valuation

• From Business: Finance


• Closed, but you can still post tutorials


• Due on Mar. 29, 2009


• Asked on Mar. 29, 2009 at 12:27:33AM

Q:

The reformated balance sheet and income statement for a firm's 2006 fiscal year are given
Comprehensive income statement
Sales 3726
operating expenses (3204)
OI before stock compensation 522
Stock Option compensation (22)
Operating income 500
Interest expense 98
Interest income (15)
83
Tax benefit 29
54
Unrealized gain on investment (50)
Loses on put options 120 (124)
Comprehensive income 376

Balance sheet
2006 2005
Net operating Assets 3160 2900
Net financials obligations 1290 1470
Common shareholder's equity 1870 1430

At
the end of 2006 sales were forecasted to grow aaaaaaaat 6 percent per
year on a constant asset turnover of 1.25. operating profit of 14
percent (after tax) are expected each year. The firm tax rate is 35
percent.

a. Forecast return on net operating assets (RNOA) FOR 2007.
b. Forecast residual operating income for 2007. Use a required return for operations of 9 percent.
c. Value the shareholders equity at the end of the 2006 fiscal year using residual income methods.
d. Forecast abnormal growth in operating income for 2008.
e. Value the shareholders equity at the end of 2006 using abnormal earnings growth methods.
f.
After reading the stock compensation footnote for this firm, you note
that there are employee stock options on 28 million shares outstanding
at the end of 2006. A modified black-scholes valuation of these options
is 15 each. How does this information change your valuation?
G. Forecast (net) comprehensive income for 2007.

 

vikashgangawar asked: sorry,
i am running short of time therefore can not do it in 4 hrs.
To which salbundy said: That's fine but i need it right away