1) Hooyay is a low cost manufacturer of smartphones in Myanmar. They recently listed in 2017 on the Singapore Exchange and did not issue any dividends for 2017 and have no plans to for 2018. They do believe that it would be possible to issue dividends in 2024 at a 42.5% payout ratio. Their current capital structure is 60% equity and 40% debt with a target ratio of debt to equity of .35. For 2017, they generated SGD 45,000,000 of net income on SGD85,000,000 of revenue on 10,000,000 shares that they issued. The current cost of debt is 17% with a 35% tax rate. The company is currently trading at a 2.3 Beta while the Singaporean treasury rate is at 2.5% and the market has returned 11.8% on average for the last decade. Net Income is expected to grow at 12% for the foreseeable future. (14 pts)
a. What is the cost of equity? (2 pts)
b. What is the WACC? (2 pts)
c. Using the DDM what is the firm value of the company in 2023? (2 pts)
d. Using the DDM, what is the firm value of the company at the end of 2017? (2 pts)
e. What is the share price? (2 pts)
f. What is the issue with the company growth rate? (4 pts)
2) Okamoto Industries has just published their financials for FY 2018. They generated JPY 85,450,000,000 in sales and maintained their 35% gross margin and 15% net margin. During that year the company had debt outstanding of JPY 8,232,000,000 with a 3.65% coupon rate. The company was taxed at the 21.5% rate. The company also had depreciation charges of JPY 635,000,000. Fixed capital investment was 85% of depreciation and working capital investment was 2.6% of sales. The company believes that it can maintain high growth of sales at 18% for the next five years where it will then fall to its long term growth rate of 4.5%. Both gross and net margin will decline by 1% per year (next year gross margin will be 34%) until they reach their stable levels of 30% and 10% respectively. The company will pay down debt by 500,000,000 for the next five years before reaching a sustainable debt level with the same coupon rate. Depreciation charge will decrease by 10% per year for five years. Fixed capital investment will increase by 5% relative to depreciation charge each year until it reaches 100% of depreciation charges and remain at that level. Working capital will remain 2.6% of sales. During the high growth phase, the company’s WACC is estimated to be 26.5% while the longer term WACC is calculated to be 15%. (12 pts)
a. What is the FCFF to the firm in 2018? (4 pts)
b. What is the FCFF to the firm in 2019? (4 pts)
c. What is the value of the firm using DCF valuation? (2 pts)
d. What is the equity value of the firm assuming the initial debt value is at market value? (2 pts)
3) Mercadolibre is an Argentinian based online shopping platform partially owned by Amazon. The company has had moderate success growing their topline at a steady rate of 30% while maintaining 18.5% net margins that they expect to maintain for the next three years. In year 4, residual income is expected to grow at 7.2% indefinitely. In FY 2018 they generated ARP 25,458,900,000 in revenue while their balance sheet showed that they had ARP 96,236,000,000 in assets while also having ARP 53,987,120,000 in liabilities. The company maintains a dividend policy of 4.2%. The required return on equity is 13.65%. (16 pts)
a. What is the initial Book Value of Mercadolibre? (2 pts)
b. What is the residual income in 2019? (4 pts)
c. What is the value of the company in 2018? (6 pts)
d. What would be a problem with using the residual income model for Mercadolibre? (4 pts)
4) Using the attached KMB Data sheet, please calculate the credit ratios (8 pts)
• EBIT Coverage Ratio
• EBITDA Coverage Ratio
• FFO/Total Debt
• Total Debt/EBITDA
• Net Debt/EBITDA
• Total Debt/Capitalization
• Some Notes
o Total Debt = Short Term Debt + Long Term Debt
o For FFO/Total Debt there is no amortization expense and for now we will assume no non cash items
Compelling correspondence is essential to the achievement all things considered but since of the changing idea of the present working environments, successful correspondence turns out to be more troublesome, and because of the numerous impediments that will permit beneficiaries to acknowledge the plan of the sender It is restricted. Misguided judgments.In spite of the fact that correspondence inside the association is rarely completely open, numerous straightforward arrangements can be executed to advance the effect of these hindrances.
Concerning specific contextual analysis, two significant correspondence standards, correspondence channel determination and commotion are self-evident. This course presents the standards of correspondence, the act of general correspondence, and different speculations to all the more likely comprehend the correspondence exchanges experienced in regular daily existence. The standards and practices that you learn in this course give the premise to additionally learning and correspondence.
This course starts with an outline of the correspondence cycle, the method of reasoning and hypothesis. In resulting modules of the course, we will look at explicit use of relational connections in close to home and expert life. These incorporate relational correspondence, bunch correspondence and dynamic, authoritative correspondence in the work environment or relational correspondence. Rule of Business Communication In request to make correspondence viable, it is important to follow a few rules and standards. Seven of them are fundamental and applicable, and these are clear, finished, brief, obliging, right, thought to be, concrete. These standards are frequently called 7C for business correspondence. The subtleties of these correspondence standards are examined underneath: Politeness Principle: When conveying, we should build up a cordial relationship with every individual who sends data to us.
To be inviting and polite is indistinguishable, and politeness requires an insightful and amicable activity against others. Axioms are notable that gracious “pay of graciousness is the main thing to win everything”. Correspondence staff ought to consistently remember this. The accompanying standards may assist with improving courtesy:Preliminary considering correspondence with family All glad families have the mystery of progress. This achievement originates from a strong establishment of closeness and closeness. Indeed, through private correspondence these cozy family connections become all the more intently. Correspondence is the foundation of different affiliations, building solid partners of obedient devotion, improving family way of life, and assisting with accomplishing satisfaction (Gosche, p. 1). In any case, so as to keep up an amicable relationship, a few families experienced tumultuous encounters. Correspondence in the family is an intricate and alluring marvel. Correspondence between families isn’t restricted to single messages between families or verbal correspondence.
It is a unique cycle that oversees force, closeness and limits, cohesiveness and flexibility of route frameworks, and makes pictures, topics, stories, ceremonies, rules, jobs, making implications, making a feeling of family life An intelligent cycle that makes a model. This model has passed ages. Notwithstanding the view as a family and family automatic framework, one of the greatest exploration establishments in between family correspondence centers around a family correspondence model. Family correspondence model (FCP) hypothesis clarifies why families impart in their own specific manner dependent on one another ‘s psychological direction. Early FCP research established in media research is keen on how families handle broad communications data. Family correspondence was perceived as an exceptional scholastic exploration field by the National Communications Association in 1989. Family correspondence researchers were at first impacted by family research, social brain science, and relational hypothesis, before long built up the hypothesis and began research in a family framework zeroed in on a significant job. Until 2001, the primary issue of the Family Communication Research Journal, Family Communication Magazine, was given. Family correspondence is more than the field of correspondence analysts in the family. Examination on family correspondence is normally done by individuals in brain science, humanism, and family research, to give some examples models. However, as the popular family correspondence researcher Leslie Baxter stated, it is the focal point of this intelligent semantic creation measure making the grant of family correspondence special. In the field of in-home correspondence, correspondence is normally not founded on autonomous messages from one sender to one beneficiary, yet dependent on the dynamic interdependency of data shared among families It is conceptualized. The focal point of this methodology is on the shared trait of semantic development inside family frameworks. As such, producing doesn’t happen in vacuum, however it happens in a wide scope of ages and social exchange.
Standards are rules end up being followed when performing work to agree to a given objective. Hierarchical achievement relies significantly upon compelling correspondence. So as to successfully impart, it is important to follow a few standards and rules. Coming up next are rules to guarantee powerful correspondence: clearness: lucidity of data is a significant guideline of correspondence. For beneficiaries to know the message plainly, the messages ought to be sorted out in a basic language. To guarantee that beneficiaries can without much of a stretch comprehend the importance of the message, the sender needs to impart unmistakably and unhesitatingly so the beneficiary can plainly and unquestionably comprehend the data.>