Post the results of the valuation that you prepared of a financial and banking institution. What are the results of the valuation analysis? What is the range of estimated value for 1 standard deviation above and below your best estimate? What special p

20180709213824excess_returns_model_440_6380.xlsx

Home >Applied Sciences homework help > Post the results of the valuation that you prepared of a financial and banking institution. What are the results of the valuation analysis? What is the range of estimated value for 1 standard deviation above and below your best estimate? What special p

Sheet1

			EXCESS RETURNS MODEL - VALUING FINANCIAL INSTITUTION 1
			(Insert Required Data in Yellow-Coded Cells Only)
	$11,478,000,000.0	Book Value of Equity Invested From Balance Sheet End of Previous Full Year
	$8,354,000,000.0	Book Value of Equity Invested Currently (May be Same as Above)
	$1,919,000,000.0	Annual Net Income from Previous Year
	10.3%	Dividend Payout Ratio
	1.31	Beta of Company's Stock
	3.50%	Risk-free Rate
	2.00%	Equity (Market) Excess Return Premium
	6.12%	Cost of Equity (Computer Calculates)
	16.72%	Return on Equity (Computer Calculates)
	489164000	Number of Shares Outstanding
	14.30%	Assumed Growth Rate for Net Income After Year 5
	49.77%	Assumed Return on Equity After Year 5
	6.12%	Assumed Cost of Equity After Year 5
		Year	1	2	3	4	5	6
		Net Income	$1,396,700,296.2	$1,606,161,899.1	$1,847,036,227.6	$2,124,034,213.4	$2,442,573,281.6
		- Equity Cost	$511,264,800.0	$587,938,618.1	$676,111,124.2	$777,506,763.8	$894,108,595.6
		Excess Equity Return	$885,435,496.22	$1,018,223,280.97	$1,170,925,103.34	$1,346,527,449.58	$1,548,464,686.00
		Present Value	$834,371,933.9	$904,166,766.4	$979,799,904.9	$1,061,759,721.0	$1,150,575,438.4
		Beginning Book Value of Equity	8,354,000,000.0	9,606,840,165.7	11,047,567,389.2	12,704,358,885.3	14,609,617,574.7
		Cost of Equity	6.12%	6.12%	6.12%	6.12%	6.12%
		Equity Cost	$511,264,800.0	$587,938,618.1	$676,111,124.2	$777,506,763.8	$894,108,595.6
		Return on Equity	16.72%	16.72%	16.72%	16.72%	16.72%
		Net Income	$1,396,700,296.2	$1,606,161,899.1	$1,847,036,227.6	$2,124,034,213.4	$2,442,573,281.6
		Dividend Payout Ratio	10.3%	10.3%	10.3%	10.3%	10.3%
		Dividends Paid	$143,860,130.5	$165,434,675.6	$190,244,731.4	$218,775,524.0	$251,585,048.0
		Retained Earnings	$1,252,840,165.7	$1,440,727,223.5	$1,656,791,496.1	$1,905,258,689.4	$2,190,988,233.6	$2,504,299,551.0
		Terminal Value of Excess Returns					$5,031,745,129.5
							The PV of Excess Returns
			Valuation				Will Equal 0 if the Assumed ROE
			Book Value of Equity Invested Currently	$8,354,000,000.0			= or < the Assumed Cost of Equity
			Present Value of Excess Return (Next 5 Years)	$4,930,673,764.6
			Present Value of Terminal Value of Excess Returns	$5,031,745,129.5
			Value of Equity	$18,316,418,894.0
			Number of Shares	489164000
			Value per Share	$37.44
1 This model replicates Damodaran's Excess Returns Model presented in Illustration 21-4
of Damodaran's Investment Valuation, 3rd, John Wiley & Sons (2012).