University | UNIVERSITY COLLEGE DUBLIN (UCD) |
Subject | Principle of Finance |
Principle of Finance Assignment, UCD, Singapore: National Gaming Inc. (National) operates the weekly lottery in the country
Question
National Gaming Inc. (National) operates the weekly lottery in the country. National is owned by the country’s Finance Ministry. Hence, the operating license is indefinite, and National enjoys tax-free status. The annual net profit of $300 million has been stable for many years, and is expected to remain so. The required return for operations like National’s is 10 percent.
National’s directors are considering increasing the company’s counter sales by raising the gaming payouts. This is expected to take place in 3 years’ time. Thereafter, it is estimated that the annual net profit will grow by 5 percent per annum starting in 4 years’ time. There is also the risk that net profits may shrink if counter sales do not rise. Hence, analysts pile a risk premium of 2 percentage points on the company.
Required:
Part 1: Discuss the appropriate method to estimate the current value of National without the change in gaming payouts. Calculate the value.
Part 2: Discuss the appropriate method to estimate the value of National with the change in gaming payouts. Calculate the value.
Part 3: Assume the government privatizes National through the tender sale of 1 billion shares of the company. The change in gaming payout is announced.
Use Part 2’s answer to derive the highest bid price per share for the stock of National.
Use Genting Singapore Limited’s forward price earnings ratio as proxy to derive the highest bid price per share for the stock of National.
Stuck with a lot of homework assignments and feeling stressed ? Take professional academic assistance & Get 100% Plagiarism free papers
Tags:-
- Go Business offers PSG solutions for enterprises in Singapore: Collective Intelligence and Entrepreneurship, Assignment 1, JCU, Singapore
- Design an ontology based on- Accidents can be categorised as chemical, electrical, fire, kinetic or liquid: Collective Intelligence and Entrepreneurship, Assignment 1, JCU, Singapore
- Project Control Monitoring, Assignment, HU, Singapore: Deliberate Project MONITORING AND CONTROL or PMC Identification
- DSM500: Final Project Report, Coursework 2, UOL, Singapore
- DSM080: Financial Markets, Assignment, UOL, Singapore: A grapefruit juice futures contract is for 15,000 pounds of frozen grapefruit juice
- DSM080: Financial Markets, Assignment, UOL, Singapore: The share price of a certain stock today is $42.50, and five-month European style call options with a strike price of $45 currently sell for $4.25.
- DSM080: Financial Markets, Assignment, UOL, Singapore: A trader who is working in the gold markets is able to borrow money at the interest rate of 7% per annum
- DSM080 Financial Markets, Assignment, UOL, Singapore: A dollar-based American corporation has decided that it will have to pay 6 million UK pounds in three months
- DSM060: Data Science Research Topics, Course Work Assignment, UOL, Singapore
- E2409C: Aviation, Assignment, RP, Singapore : Aircraft and Flight Operations
UP TO 15 % DISCOUNT