FratBro23
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Question description

Combining information from the S&P reports and some estimated data, the following calender-year data, on a per-share basis, are provided:

 YEAR PRICERANGELOW HIGH EARNINGS DIVIDENDS BOOKVALUE (D/E)100(%) ANNUALAVG. P/E ROE=E/BOOKTR% 1999 \$26.5 -- \$35.3 \$4.56 \$1.72 \$25.98 37.7 7.0 17.6% 2000 28.3 -- 37.0 5.02 1.95 29.15 38.8 6.2 17.3 2001 23.5 -- 34.3 5.14 2.20 32.11 42.8 5.8 16.0 2002 27.8 -- 35.0 4.47 2.20 30.86 7.7 2003 29.0 -- 47.8 5.73 2.30 30.30 6.8 2004 36.6 -- 53.5 6.75 2.40 39.85 2005 6.75 2.60 44.00

A. Calculate the D/E, ROE, and TR for 2002, 2003, and 2004. (Use the average of the low and high prices for calculate TRs).

B. Show that from 2000 through 2004 the per annum growth rate in dividends was 6.9 percent and for earnings was 8.2 percent.

C. Using the current price of \$47, with estimated earnings for 2005 of \$6.75, show that the P/E would be evaluated as 6.96.

D. On the basis of the annual average P/E ratios shown above and your estimate in Problem C, assume an expected P/E of 7. If an investor expected the earnings of GF for 2005 to be \$7.50, show that the intrinsic value would be \$52.50.

Please send the formulas that were used for each and type out the actual calculations. This is required for the whole assignment. (I need to be able to write out the work on paper! Thanks!)

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