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2.MFG Realty Trust has earnings per share of $3, out of which $1.50 will distributed to...

2.MFG Realty Trust has earnings per share of $3, out of which $1.50 will distributed to its shareholders in the form of dividends. The firm has Net Income of $20 million and 2 million shares outstanding. The firm's cost of equity capital is 10%. Based on this information, what is the firm's "intrinsic value" (or DCF value) per share?

3.DKN Energy Shares has 200 million shares outstanding. The firm's expected earnings (or net income) is $700 million. DKN plans to payout 60% of its earnings; the firm's expected payouts will be distributed as follows: Dividends: 50% Stock Repurchases: 10% Earnings are expected grow at an annual rate of 6%, and the firm's cost of equity capital is 10%. Based on this information, what is the DKN's (estimated) price per share?

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Answer #1

Price or Intrinsic value per share = Dividend Expected to be paid in year 2(D1)Cost of Equity

D1 = 1.5

Cost of Equity = 10%

So, DCF value per share = 1.5/10%

=1.5/0.10

= 15

So, Intrinsic value per share is $15.

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