Quote:
Originally Posted by Jess126
Hi there,
I was just wondering if anyone has completed Q3 iii).
If so would you be able to provide me with some help or point me i the right direction of the course notes to find the answer.
Thanks

Hi Jess, This is how I worked it out and have checked with the marker it is correct: 
Market valuation = Future Earnings divided by discount rate
Market valuation = $50million / 0.12
Market valuation = $416,666,667
Valuation per share = market valuation / number of shares
Valuation per share = $416.67million / 100million
Valuation per share = $4.17
I am having trouble with question 3A this is what I have but app is incorrect.. what answers did you get and formula??
Isabella’s rental properties: 
Cash Flows Less Expense Notes
1 July – Purchase (480,000) (Year 1) 24,960 Year 1 4,295 Year 2 Rental Included add 3%
Interest only loan of 350,000 (Year 2) 25,709 Year 2 4,402 cash exp + 2.5%
Sale in (Year 3) 575,000 (Year 3) 26,352 (Year 3) 4,490 (Year 3) rent inc + 2.5%
Discount rate 7.50% cash exp + 2.0%
Interest Rate 7.20%
Chart Purchase cash flows expenses total sale
480,000 So she waled away with
Year 1 24,960 4,295 20,665
Year 2 25,709 4,402 21,307 575,000 sale price
Year 3 26,352 4,490 21,862 575,000 480,000… price
total:  $77,021 $13,187 = $63,834
Future amount of cash flows after expenses
$158,834 Profit
PV= $158,834 Please check formula and calculation.
NPV= for this one, the equation is as follows
The PV= $158,834 (your profit) at your given discount rate of 7.5%
So, Rt / (1+i) T
OR
158,834 / (1+0.075) to the 3rd power
Also, DCF is a projection of future incomes. It is used to evaluate the highest paying lowest risk assessments’ of investments. It does this through tracking all future cash profit to a current date to assess if it meets the desired rate of return ROI
IRR Not provided
Your help or anyones help would be appricated!!