公司理财精要Chap007
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7-5
One Period Example
• • • • • D1 = $2 dividend expected in one year R = 20% P1 = $14 CF1 = $2 + $14 = $16 Compute the PV of the expected cash flows
( 2 14) P0 $13.33 1.20
– The company pays dividends – You sell your shares, either to another investor in the market or back to the company
• As with bonds, the price of the stock is the present value of these expected cash flows
150 100 50 0 0 0.05 0.1 Growth Rate
7-19
0.15
0.2
Stock Price Sensitivity to Required Return, R
250 200
D1 = $2; g = 5%
Stock Price
150 100 50 0 0 0.05 0.1 0.15 Growth Rate
7-11
Estimating Dividends
Special Cases
• Constant dividend/Zero Growth
– Firm will pay a constant dividend forever – Like preferred stock – Price is computed using the perpetuity formula
7-2
Chapter Outline
7.1 Common Stock Valuation
7.2 Some Features of Common and Preferred Stocks 7.3 The Stock Markets
7-3
Cash Flows for Stockholders
• If you own a share of stock, you can receive cash in two ways
– Dividends → cash income – Selling → capital gains
7-4
One Period Example
• Suppose you are thinking of purchasing the stock of Moore Oil, Inc.
– You expect it to pay a $2 dividend in one year – You believe you can sell the stock for $14 at that time. – You require a return of 20% on investments of this risk – What is the maximum you would be willing to pay?
CF0
CF1 CF2 CF3
=
= = =
You Enter '
0 2 1 2.10 1 17.64 1 20 % !# !# !# !# !# !# !# ( !#
7-9
C00 C01 F01 C02 F02 C03 F03 I NPV
13.33
Developing The Model
• You could continue to push back when you would sell the stock • You would find that the price of the stock is really just the present value of all expected future dividends
2 (2.10 14.70) P0 $13.33 2 1.20 (1.20)
7-7
Three Period Example
• What if you decide to hold the stock for three years?
– – – – – D1 = $2.00 CF1 = $2.00 D2 = $2.10 CF2 = $2.10 D3 = $2.205 CF3 = $2.205 + $15.435 = $17.640 P3 = $15.435 Now how much would you be willing to pay?
D1 P0 Rg
4.00 P0 $40 .16 .06
7-21
Example 7.3
Gordon Growth Company - II
• What is the price expected to be in year 4?
D5 D 4 (1 g) P4 Rg R-g D5 D1(1 g)
– D1 = $2.00 – g = 5% – r = 20%
D1 P0 Rg 2.00 P0 $13.33 .20 .05
7-18
Stock Price Sensitivity to Dividend Growth, g
250 200
D1 = $2; R = 20%
Stock Price
7-20
0.2
0.25
0.3
Example 7.3
Gordon Growth Company - I
• Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. • What is the current price?
7-10
Stock Value = PV of Dividends
^
P0 =
D1 (1+R)1
+
D2
(1+R)2
+
D3
(1+R)3
+…+
D∞
(1+R)∞
D t ˆ P0 t t 1 (1 R )
How can we estimate all future dividend payments?
7-15
Dividend Growth Model
( 1 g ) ˆ D P 0 0 t t 1 (1 R)
t
^ D0(1+g) P0 = R-g
D1 = R-g
7-16
“Gordon Growth Model”
DGM – Example 1
• Suppose Big D, Inc. just paid a dividend of $.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for? • D0= $0.50
Zero Growth
• Dividends expected at regular intervals forever = perpetuity
P0 = D / R
• Suppose stock is expected to pay a $0.50 dividend every quarter and the required return is 10% with quarterly compounding. What is the price? 0.50
IMPORTANT: In order to view the correct calculator key stroke symbols within this PPT, you will need to follow the font installation directions on this document.
P0 .10 $20 4
7-13
Constant Growth Stock
One whose dividends are expected to grow forever at a constant rate, g.
D1 = D0(1+g)1 D2 = D0(1+g)2 Dt = Dt(1+g)t
• Constant dividend growth
– Firm will increase the dividend by a constant percent every period
• Supernormal growth
– Dividend growth is not consistent initially, but settles down 7-12 to constant growth eventually
D0 = Dividend JUST PAID D1 – Dt = Expected dividends
7-14
Projected Dividends
• D0 = $2.00 and constant g = 6% • D1 = D0(1+g) = 2(1.06) = $2.12 • D2 = D1(1+g) = 2.12(1.06) = $2.2472 • D3 = D2(1+g) = 2.2472(1.06) = $2.3820
P0 2 2.10 (2.205 15.435) $13.33 2 3 1.20 (1.20) (1.20)
7-8
Three Period Example
Using TI BAII+ Cash Flow Worksh
0
2.00 2.10 17.64
• g = 2%
• R = 15%
D0 (1 g) P0 Rg 0.50(1 .02) P0 $3.92 .15 .02
7-17
DGM – Example 2
• Suppose TB Pirates, Inc. is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year and the required return is 20%, what is the price?
7-6
Two Period Example
• What if you decide to hold the stock for two years?
– – – – D1 = $2.00 CF1 = $2.00 D2 = $2.10 CF2 = $2.10 + $14.70 = $16.80 P2 = $14.70 Now how much would you be willing to pay?
7-1
McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
• Understand how stock prices depend on future dividends and dividend growth • Be able to compute stock prices using the dividend growth model • Understand how corporate directors are elected • Understand how stock markets work • Understand how stock prices are quoted
4 4
4.00(1 .06) P4 $50.50 .16 .06
7-22
Example 7.3
One Period Example
• • • • • D1 = $2 dividend expected in one year R = 20% P1 = $14 CF1 = $2 + $14 = $16 Compute the PV of the expected cash flows
( 2 14) P0 $13.33 1.20
– The company pays dividends – You sell your shares, either to another investor in the market or back to the company
• As with bonds, the price of the stock is the present value of these expected cash flows
150 100 50 0 0 0.05 0.1 Growth Rate
7-19
0.15
0.2
Stock Price Sensitivity to Required Return, R
250 200
D1 = $2; g = 5%
Stock Price
150 100 50 0 0 0.05 0.1 0.15 Growth Rate
7-11
Estimating Dividends
Special Cases
• Constant dividend/Zero Growth
– Firm will pay a constant dividend forever – Like preferred stock – Price is computed using the perpetuity formula
7-2
Chapter Outline
7.1 Common Stock Valuation
7.2 Some Features of Common and Preferred Stocks 7.3 The Stock Markets
7-3
Cash Flows for Stockholders
• If you own a share of stock, you can receive cash in two ways
– Dividends → cash income – Selling → capital gains
7-4
One Period Example
• Suppose you are thinking of purchasing the stock of Moore Oil, Inc.
– You expect it to pay a $2 dividend in one year – You believe you can sell the stock for $14 at that time. – You require a return of 20% on investments of this risk – What is the maximum you would be willing to pay?
CF0
CF1 CF2 CF3
=
= = =
You Enter '
0 2 1 2.10 1 17.64 1 20 % !# !# !# !# !# !# !# ( !#
7-9
C00 C01 F01 C02 F02 C03 F03 I NPV
13.33
Developing The Model
• You could continue to push back when you would sell the stock • You would find that the price of the stock is really just the present value of all expected future dividends
2 (2.10 14.70) P0 $13.33 2 1.20 (1.20)
7-7
Three Period Example
• What if you decide to hold the stock for three years?
– – – – – D1 = $2.00 CF1 = $2.00 D2 = $2.10 CF2 = $2.10 D3 = $2.205 CF3 = $2.205 + $15.435 = $17.640 P3 = $15.435 Now how much would you be willing to pay?
D1 P0 Rg
4.00 P0 $40 .16 .06
7-21
Example 7.3
Gordon Growth Company - II
• What is the price expected to be in year 4?
D5 D 4 (1 g) P4 Rg R-g D5 D1(1 g)
– D1 = $2.00 – g = 5% – r = 20%
D1 P0 Rg 2.00 P0 $13.33 .20 .05
7-18
Stock Price Sensitivity to Dividend Growth, g
250 200
D1 = $2; R = 20%
Stock Price
7-20
0.2
0.25
0.3
Example 7.3
Gordon Growth Company - I
• Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. • What is the current price?
7-10
Stock Value = PV of Dividends
^
P0 =
D1 (1+R)1
+
D2
(1+R)2
+
D3
(1+R)3
+…+
D∞
(1+R)∞
D t ˆ P0 t t 1 (1 R )
How can we estimate all future dividend payments?
7-15
Dividend Growth Model
( 1 g ) ˆ D P 0 0 t t 1 (1 R)
t
^ D0(1+g) P0 = R-g
D1 = R-g
7-16
“Gordon Growth Model”
DGM – Example 1
• Suppose Big D, Inc. just paid a dividend of $.50. It is expected to increase its dividend by 2% per year. If the market requires a return of 15% on assets of this risk, how much should the stock be selling for? • D0= $0.50
Zero Growth
• Dividends expected at regular intervals forever = perpetuity
P0 = D / R
• Suppose stock is expected to pay a $0.50 dividend every quarter and the required return is 10% with quarterly compounding. What is the price? 0.50
IMPORTANT: In order to view the correct calculator key stroke symbols within this PPT, you will need to follow the font installation directions on this document.
P0 .10 $20 4
7-13
Constant Growth Stock
One whose dividends are expected to grow forever at a constant rate, g.
D1 = D0(1+g)1 D2 = D0(1+g)2 Dt = Dt(1+g)t
• Constant dividend growth
– Firm will increase the dividend by a constant percent every period
• Supernormal growth
– Dividend growth is not consistent initially, but settles down 7-12 to constant growth eventually
D0 = Dividend JUST PAID D1 – Dt = Expected dividends
7-14
Projected Dividends
• D0 = $2.00 and constant g = 6% • D1 = D0(1+g) = 2(1.06) = $2.12 • D2 = D1(1+g) = 2.12(1.06) = $2.2472 • D3 = D2(1+g) = 2.2472(1.06) = $2.3820
P0 2 2.10 (2.205 15.435) $13.33 2 3 1.20 (1.20) (1.20)
7-8
Three Period Example
Using TI BAII+ Cash Flow Worksh
0
2.00 2.10 17.64
• g = 2%
• R = 15%
D0 (1 g) P0 Rg 0.50(1 .02) P0 $3.92 .15 .02
7-17
DGM – Example 2
• Suppose TB Pirates, Inc. is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year and the required return is 20%, what is the price?
7-6
Two Period Example
• What if you decide to hold the stock for two years?
– – – – D1 = $2.00 CF1 = $2.00 D2 = $2.10 CF2 = $2.10 + $14.70 = $16.80 P2 = $14.70 Now how much would you be willing to pay?
7-1
McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
Key Concepts and Skills
• Understand how stock prices depend on future dividends and dividend growth • Be able to compute stock prices using the dividend growth model • Understand how corporate directors are elected • Understand how stock markets work • Understand how stock prices are quoted
4 4
4.00(1 .06) P4 $50.50 .16 .06
7-22
Example 7.3