Valuation – Constant Dividend Growth model (DGM) Exhibit 10…

Valuation – Constant Dividend Growth model (DGM) Exhibit 10 provides the stock price and dividend paid (annual) by PCP on March 31, 2015. What is the estimate of the implied cost of equity based on the average of the high and low stock prices and the annual dividends reported on March 31, 2015? Use the constant dividend growth model and assume a dividend growth rate of 4.5% per year.

Valuation – FCF Valuation Use the following information to c…

Valuation – FCF Valuation Use the following information to calculate the enterprise value of PCP in 2015. Use the FCF constant growth model. Tax rate = 39%, long term growth rate for FCF: g=2.5% per year, WACC =5%, Income from Operations (2015) = $2612 million. Use the following assumptions: FCF = (1-Tax)*(Income from Operations) + Depreciation – Capital Expenditures – Changes in Net Working Capital Since there is no information on depreciation and working capital, you can assume that Depreciation = Capital Expenditures + Changes in Net Working Capital.  Hence, FCF = (1-Tax)*(Income from Operations)