Make the following Assumptions: Tangible Asset Value = 16,200,000 Required Return on Tangile Assets = 16% Required Return on Equity = 24% Forecast Net Income for next period (year) = 4,800,000 Capitalization Rate for Excess earnings to compute Intangible Asset Value = 30% Current Market Value of Interest Bearing Liabilities = 12,000,000 Compute the Market Value of Equity using the Excess Earnings Approach

Make the following Assumptions: Tangible Asset Value = 16,200,000 Required Return on Tangile Assets = 16% Required Return on Equity = 24% Forecast Net Income for next period (year) = 4,800,000 Capitalization Rate for Excess earnings to compute Intangible Asset Value = 30% Current Market Value of Interest Bearing Liabilities = 12,000,000 Compute the Market Value of Equity using the Excess Earnings Approach

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 2CIC

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