悉尼大学资本市场与公司财务课件Lecture3.ppt

Perpetuity A perpetuity is a special case of an annuity – it is an annuity that continues indefinitely The formula for the present value of a perpetuity is: Growing Perpetuity In some applications, the periodic cash flows (A) may grow by a constant rate (g) each year The PV of the perpetuity under this condition is Where A1 is the cash flow at the end of the first year A1 = A0(1+g) Constant dividend growth model Example 3.4 In the year ended December 2007, National Australia Bank generated EPS of 269 cents, paid a dividend of 182 cents per share, and its ROE was estimated at 17%. What is the expected future earnings and dividend growth rate? _______________________________________________ P/E ratios Price-Earnings ratio The price of a share divided by its earnings per share Used to determine whether a stock is overpriced or underpriced where: ρ = the dividend payout ratio P/E ratios (cont) Note that the left-hand side of this equation represents the prospective P/E ratio because the current share price is divided by the one-year-ahead (not historical) EPS This model demonstrates that the prospective P/E ratio is: Positively related to the payout ratio Negatively related to the cost of equity Positively related to the dividend growth rate Hence it is possible for the P/E ratio for two companies to differ because of these factors Example ANZ and NAB are both large Australian banks and are assumed to be comparable – their P/E ratios were similar in 2006 but not in 2005 and 2007. P/E ratios for ANZ and NAB, 2004-2007 ANZ NAB EPS PRICE P/E EPS PRICE P/E 2007 224.1 29.70 13.25 269.0 39.71 14.76 2006 200.0 26.86 13.43 262.6 36.70 13.98 2005 160.9 14.92 14.92 252.0 33.05 13.12 P/E ratios (cont) TABLE 3.3 These divergent figures would indicate that: Shareholders were paying too much for one of the stocks, and/or The other was relatively underpriced by the market For example, the 2007 P/E ratios indicate that: NAB shares were rel