You are the CFO of a large, private, multinational food company. This morning in the elevator, the CEO mentioned that she
Learning Goal: I’m working on a business discussion question and need an explanation and answer to help me learn.
Topic: You are the CFO of a large, private, multinational food company. This morning in the elevator, the CEO mentioned that she was interested in raising some money in order to finance the potential acquisition of a competitor. You suggested the possibility of issuing common stock. The CEO says she doesn’t remember much about stock valuation from the finance class she took at Pierce College way back in 2008, and asks you to write a brief (150-250 word) memo summarizing the various methods of equity valuation and your expectation of the IPO price of your company. Your company currently pays a $1.50 dividend per quarter, has an ROE of 10%, and has EPS of $10 per year. An appropriate discount rate is about 7%. Hint: You will use the DDM to calculate an expected IPO price.
Warning: DO NOT PLAGIARIZE. In your responses, you must always use your own words. Do not simply copy/paste your answers directly or indirectly from Google search results. That is considered plagiarism. Plagiarism may result in a 0 on the assignment, and further disciplinary action being taken by the Office of Academic Affairs. Your responses will be evaluated using the anti-plagiarism software from Vericite.
NOTE: I recommend writing your response in a Word document first, and then uploading your response when completed. This will allow you to save your work in Word in case your computer crashes, and also Word allows you to check for spelling and grammar mistakes.
Answer preview for You are the CFO of a large, private, multinational food company. This morning in the elevator, the CEO mentioned that she