ChapterTool KitChapter 710/27/15Corporate Valuation and Stock Valuation7-4 Valuing Common Stocks—Introducing the Free Cash Flow (FCF) Valuation ModelData for B&B Corporation (Millions)Constant free cash flow (FCF) =$10Weighted average cost of capital (WACC) =10%Short-term investments =$2Debt =$28Preferred stock =$4Number of shares of common stock =5The first step is to estimate the value of operations, which is the present value of all expected free cash flows. Because the FCF's are expected to be constant, this is a perpetuity. The present value of a perpetuity is the cash flow divided by the cost of capital:Value of operations (Vop) =FCF/WACCValue of operations (Vop) =$100.00millionB&B's total value is the sum of value of operations and the short-term investments: Value of operations$100+ ST investments$2Estimated total intrinsic value$102The next step is to estimate the intrinsic value of equity, which is the remaining total value after accounting for the claims of debtholders and preferred stockholders: Value of operations$100+ ST investments$2Estimated total intrinsic value$102− All debt$28− Preferred stock$4Estimated intrinsic value of equity$70The final step is to estimate the intrinsic common stock price per share, which is the estimated intrinsic value of equity divided by the number of shares of common stock: Value of operations$100+ ST investments$2Estimated total intrinsic value$102− All debt$28− Preferred stock$4Estimated intrinsic value of equity$70÷ Number of shares5Estimated intrinsic stock price =$14.00The figure below shows a summary of the previous calculations.Figure 7-2B&B Corporation's Sources of Value and Claims on Value (Millions of Dollars except Per Share Data)Inputs:Valuation AnalysisConstant free cash flow (FCF) =$10Value of operations$100Weighted average cost of capital (WACC) =10%+ ST investments$2Short-term investments =$2Estimated total intrinsic value$102Debt =$28− All debt$28Preferred stock =$4− Preferred stock$4Number of shares of common stock =5Estimated intrinsic value of equity$70÷ Number of shares5Estimated intrinsic stock price$14.00Data for Pie ChartsShort-term investments =$2Value of operations =$100Total =$102Debt =$28Preferred stock =$4Estimated equity value =$70Total =$1027-5 The Constant Growth Model: Valuation when Expected Free Cash Flow Grows at a Constant RateCase 1: The expected free cash flow at t=1 and the expected constant growth rate after t=1 are known.First expected free cash flow (FCF1) =$105Weighted average cost of capital (WACC) =9%Constant growth rate (gL) =5%When free cash flows are expected to grow at a constant rate, the value of operations is:Value of operations (Vop) =FCF1 / [WACC-gL]Value of operations (Vop) =$2,625Case 2: Constant growth is expected to begin immediately.Most recent free cash flow (FCF0) =$200Weighted average cost of capital (WACC) =12%Constant growth rate (gL) =7%When free cash flows are expected to grow at a constant rate, the value of operations is:.
Mini Case1615Chapter 8 Mini CaseSituationYour employer, a mid-si.docxARIV4
Mini Case1/6/15Chapter 8 Mini CaseSituationYour employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporary heavy workloads. Your employer is also considering the purchase of a Biggerstaff & McDonald (B&M), a privately held company owned by two friends, each with 5 million shares of stock. B&M currently has free cash flow of $24 million, which is expected to grow at a constant rate of 5%. B&M’s financial statements report marketable securities of $100 million, debt of $200 million, and preferred stock of $50 million. B&M’s weighted average cost of capital (WACC) is 11%. Answer the following questions.a. Describe briefly the legal rights and privileges of common stockholders.Features of Common Stock1. Common Stock represents ownership. 2. Ownership implies control. 3. Stockholders elect directors. 4. Directors hire management who attempt to maximize stock price.Classified StockClassified Stock carries special provisions. For example, shares could be classified as founders' shares which come with voting rights but dividend restrictions.b. What is free cash flow (FCF)? What is the weighted average cost of capital? What is the free cash flow valuation model? c. Use a pie chart to illustrate the sources that comprise a hypothetical company’s total value. Using another pie chart, show the claims on a company’s value. How is equity a residual claim? Data for chartsColumn110Mkt. Sec.1Claims on ValuePref. Stk.1Debt37d. Suppose the free cash flow at Time 1 is expected to grow at a constant rate of gL forever. If gL < WACC, what is a formula for the present value of expected free cash flows when discounted at the WACC? If the most recent free cash flow is expected to grow at a constant rate of gL forever (and gL < WACC), what is a formula for the present value of expected free cash flows when discounted at the WACC? If constant growth begins at Time 1:If constant growth begins at Time 0:e. Use B&M’s data and the free cash flow valuation model to answer the following questions.INPUT DATA SECTION: Data used for valuation (in millions)Free cash flow$24.0WACC11%Growth5%Short-term investments $100.0Debt$200.0Preferred stock$50.0Number of shares of stock10.0 (1) What is its estimated value of operations?Vop =FCF1 =FCF0 (1+gL)(WACC-gL)(WACC-gL)Vop =$25.20.06Vop =$420.00 (2) What is its estimated total corporate value? Value of Operation$420.0Plus Value of Non-operating Assets$100.0Total Corporate Value$520.0 (3) What is its estimated intrinsic value of equity?Debt holders have the first claim on corporate value. Preferred stockholders have the next claim and the remaining is left to common stockholders.Total Corporate Value$520.0Minus Value of Debt$200.0Minus Value of Preferred Stock$50.0Intrinsic Value of Equity$270.0 (4) What ...
Mini Case1615Chapter 8 Mini CaseSituationYour employer, a mid-si.docxARIV4
Mini Case1/6/15Chapter 8 Mini CaseSituationYour employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporary heavy workloads. Your employer is also considering the purchase of a Biggerstaff & McDonald (B&M), a privately held company owned by two friends, each with 5 million shares of stock. B&M currently has free cash flow of $24 million, which is expected to grow at a constant rate of 5%. B&M’s financial statements report marketable securities of $100 million, debt of $200 million, and preferred stock of $50 million. B&M’s weighted average cost of capital (WACC) is 11%. Answer the following questions.a. Describe briefly the legal rights and privileges of common stockholders.Features of Common Stock1. Common Stock represents ownership. 2. Ownership implies control. 3. Stockholders elect directors. 4. Directors hire management who attempt to maximize stock price.Classified StockClassified Stock carries special provisions. For example, shares could be classified as founders' shares which come with voting rights but dividend restrictions.b. What is free cash flow (FCF)? What is the weighted average cost of capital? What is the free cash flow valuation model? c. Use a pie chart to illustrate the sources that comprise a hypothetical company’s total value. Using another pie chart, show the claims on a company’s value. How is equity a residual claim? Data for chartsColumn110Mkt. Sec.1Claims on ValuePref. Stk.1Debt37d. Suppose the free cash flow at Time 1 is expected to grow at a constant rate of gL forever. If gL < WACC, what is a formula for the present value of expected free cash flows when discounted at the WACC? If the most recent free cash flow is expected to grow at a constant rate of gL forever (and gL < WACC), what is a formula for the present value of expected free cash flows when discounted at the WACC? If constant growth begins at Time 1:If constant growth begins at Time 0:e. Use B&M’s data and the free cash flow valuation model to answer the following questions.INPUT DATA SECTION: Data used for valuation (in millions)Free cash flow$24.0WACC11%Growth5%Short-term investments $100.0Debt$200.0Preferred stock$50.0Number of shares of stock10.0 (1) What is its estimated value of operations?Vop =FCF1 =FCF0 (1+gL)(WACC-gL)(WACC-gL)Vop =$25.20.06Vop =$420.00 (2) What is its estimated total corporate value? Value of Operation$420.0Plus Value of Non-operating Assets$100.0Total Corporate Value$520.0 (3) What is its estimated intrinsic value of equity?Debt holders have the first claim on corporate value. Preferred stockholders have the next claim and the remaining is left to common stockholders.Total Corporate Value$520.0Minus Value of Debt$200.0Minus Value of Preferred Stock$50.0Intrinsic Value of Equity$270.0 (4) What ...
There are 76 red xxx’s – each worth 1.18 points. You only need to.docxchristalgrieg
There are 76 red xxx’s – each worth 1.18 points. You only need to fill in where you see red xxx’s (big or small)
CHAPTER 1
THE McGEE CAKE COMPANY
1. The advantages to a LLC are: xxxx
The biggest disadvantage is: xxxx
2. .xxxx
C-2 CASE SOLUTIONS
3. .xxxx
CHAPTER 2
CASH FLOWS AND FINANCIAL STATEMENTS
Below are the financial statements that you are asked to prepare.
1. The income statement for each year will look like this:
Income Statement
2010
2011
Sales
xxxx
xxxx
Cost of goods sold
163,849
206,886
Selling and administrative
xxxx
xxxx
Depreciation
46,255
52,282
EBIT
$79,110
$90,584
Interest
10,056
11,526
EBT
$69,054
$79,058
Taxes (use the problem to figure
This amount out
xxxx
xxxx
Net income
$55,243
$63,246
Dividends(read the case to find out how much this is)
xxxx
xxxx
Addition to retained earnings
(this would be whatever the net income is less the dividends paid out)
xxxx
xxxx
2. The balance sheet for each year will be:
Balance Sheet as of Dec. 31, 2010
Cash
xxxx
Accounts payable
xxxx
Accounts receivable
xxxx
Notes payable
xxxx
Inventory
xxxx
Current liabilities
$60,832
Current assets
$72,651
Long-term debt
xxxxx
Net fixed assets
xxxxxx
Owners' equity
xxxxx
Total assets
$276,719
Total liab. and equity
$276,719
In the first year, equity is not given. Therefore, we must calculate equity as a plug variable. Since total liabilities and equity is equal to total assets, equity can be calculated as:
Equity = $276,719 – 60,832 – 103,006
Equity = $112,881
Balance Sheet as of Dec. 31, 2011
Cash
xxxx
Accounts payable
xxxx
Accounts receivable
xxxx
Notes payable
xxxx
Inventory
xxxx
Current liabilities
$68,121
Current assets
$100,834
Long-term debt
xxxx
Net fixed assets
xxxx
Owners' equity
Xxxx(see below)
Total assets
$349,459
Total liab. and equity
$349,459
The owner’s equity for 2011 is the beginning of year owner’s equity, plus the addition to retained earnings, plus the new equity, so:
Equity = $112,881 + 31,623 + 20,500
Equity = $165,004
3-6 are completed for you so you can answer the questions
3. Using the OCF equation: (
OCF = EBIT + Depreciation – Taxes
The OCF for each year is:
OCF2010 = $79,110 + 46,255 – 13,811
OCF2010 = $111,554
OCF2011 = $90,584 + 52,282 – 15,812
OCF2011 = $127,054
4.
To calculate the cash flow from assets, we need to find the capital spending and change in net working capital. The capital spending for the year was:
Capital spending
Ending net fixed assets
$248,625
– Beginning net fixed assets
204,068
+ Depreciation
52,282
Net capital spending
$96,839
And the change in net working capital was:
Change in net working capital
Ending NWC
$32,713
– Beginning NWC
11,819
Change in NWC
$20,894
So, the cash flow from assets was:
Cash flow from assets
Operating cash flow
$127,054
– Net capital spending
96,839
– Change in NWC
...
This slide set is a work in progress and is embedded in my Principles of Finance course, which is also a work in progress, that I teach to computer scientists and engineers
http://awesomefinance.weebly.com/
CHAPTER 3Understanding Regulations, Accreditation Criteria, and .docxtiffanyd4
CHAPTER 3
Understanding Regulations, Accreditation Criteria, and Other Standards ofPractice
NAEYC Administrator Competencies Addressed in This Chapter:
Management Knowledge and Skills
2. Legal and Fiscal Management
· Knowledge and application of the advantages and disadvantages of different legal structures
· Knowledge of different codes and regulations as they relate to the delivery of early childhood program services
· Knowledge of child custody, child abuse, special education, confidentiality, anti-discrimination, insurance liability, contract, and laborlaws pertaining to program management
5. Program Operations and Facilities Management
· Knowledge and application of policies and procedures that meet state/local regulations and professional standards pertaining to thehealth and safety of young children
7. Marketing and public relations
· Skill in developing a business plan and effective promotional literature, handbooks, newsletters, and press releases
Early Childhood Knowledge and Skills
5. Children with Special Needs
· Knowledge of licensing standards, state and federal laws (e.g., ADA, IDEA) as they relate to services and accommodations for childrenwith special needs
10. Professionalism
· Knowledge of laws, regulations, and policies that impact professional conduct with children and families
· Knowledge of center accreditation criteria
Learning Outcomes
After studying this chapter, you will be able to:
1. Describe the purpose of regulations that apply to programs of early care and education and list several topics they address.
2. Identify several ways accreditation standards are different from child care regulations.
3. State the purpose of Quality Rating and Improvement Systems (QRIS).
4. List some ways qualifications for administrators and teachers are different for licensure, for accreditation, and in QRIS systems.
5. Identify laws that apply to the childcare workplace, such as those that govern the program’s financial management and employees’well-being.
Marie’s Experience
Marie has been successful over the years in keeping her center in compliance with all licensing regulations. She is proud of her teachers andconfident that the center consistently goes above and beyond licensing provisions designed simply to keep children healthy and safe. She knowsthat the center provides high-quality care to the children it serves, but has never pursued accreditation or participated in her state’s optionalQuality Rating and Improvement System (QRIS) because of the time and effort it would require. Her families have confidence in her program anddo not seem to need this additional assurance that it provides high-quality services day in and day out.
Large numbers of families rely on out-of-home care for their infants, toddlers, preschoolers, and school-age children during the workday. In2011, there were 312,254 licensed child care facilities with a capacity to serve almost 10.2 million children. About 34% of these facilitieswere child care center.
Chapter 3 Human RightsINTERNATIONAL HUMAN RIGHTS–BASED ORGANIZ.docxtiffanyd4
Chapter 3 Human Rights
INTERNATIONAL HUMAN RIGHTS–BASED ORGANIZATIONS LIKE THE UN COMMISSION ON HUMAN RIGHTS HAVE MADE MONITORING HUMAN RIGHTS A GLOBAL ISSUE. The United Nations is headquartered in New York City.
Learning Objectives
1. 3.1Review the expansion of and the commitment to the human rights agenda
2. 3.2Evaluate the milestones that led to the current concerns around human rights
3. 3.3Evaluate some of the philosophical controversies over human rights
4. 3.4Recognize global, regional, national, and local institutions and rules designed to protect human rights across the globe
5. 3.5Report the efforts made globally in bringing violators of human rights to justice
6. 3.6Relate the need for stricter laws to protect women’s human rights across the globe.
7. 3.7Recognize the need to protect the human rights of the disabled
8. 3.8Distinguish between the Western and the Islamic beliefs on individual and community rights
9. 3.9Review the balancing act that needs to be played while fighting terrorism and protecting human rights
10. 3.10Report the controversy around issuing death penalty as punishment
When Muammar Qaddafi used military force to suppress people demonstrating in Libya for a transition to democracy, there was a general consensus that there was a global responsibility to protect civilians. However, when Bashar Assad used fighter jets, tanks, barrel bombs, chemical weapons, and a wide range of brutal methods, including torture, to crush the popular uprising against his rule in Syria, the world did not respond forcefully to protect civilians. The basic reason given for allowing Syria to descend into brutality and chaos was that it was difficult to separate Syrians favoring human rights from those who embraced terrorism. Although cultural values differ significantly from one society to another, our common humanity has equipped us with many shared ideas about how human beings should treat each other. Aspects of globalization, especially communications and migration, reinforce perceptions of a common humanity. In general, there is global agreement that human beings, simply because we exist, are entitled to at least three types of rights. First is civil rights, which include personal liberties such as freedom of speech, religion, and thought; the right to own property; and the right to equal treatment under the law. Second is political rights, including the right to vote, to voice political opinions, and to participate in the political process. Third is social rights, including the right to be secure from violence and other physical danger, the right to a decent standard of living, and the right to health care and education. Societies differ in terms of which rights they emphasize. Four types of human rights claims that dominate global politics are
1. The abuse of individual rights by governments
2. Demands for autonomy or independence by various groups
3. Demands for equality and privacy by groups with unconventional lifestyles
4. Cla.
More Related Content
Similar to ChapterTool KitChapter 7102715Corporate Valuation and Stock Valu.docx
There are 76 red xxx’s – each worth 1.18 points. You only need to.docxchristalgrieg
There are 76 red xxx’s – each worth 1.18 points. You only need to fill in where you see red xxx’s (big or small)
CHAPTER 1
THE McGEE CAKE COMPANY
1. The advantages to a LLC are: xxxx
The biggest disadvantage is: xxxx
2. .xxxx
C-2 CASE SOLUTIONS
3. .xxxx
CHAPTER 2
CASH FLOWS AND FINANCIAL STATEMENTS
Below are the financial statements that you are asked to prepare.
1. The income statement for each year will look like this:
Income Statement
2010
2011
Sales
xxxx
xxxx
Cost of goods sold
163,849
206,886
Selling and administrative
xxxx
xxxx
Depreciation
46,255
52,282
EBIT
$79,110
$90,584
Interest
10,056
11,526
EBT
$69,054
$79,058
Taxes (use the problem to figure
This amount out
xxxx
xxxx
Net income
$55,243
$63,246
Dividends(read the case to find out how much this is)
xxxx
xxxx
Addition to retained earnings
(this would be whatever the net income is less the dividends paid out)
xxxx
xxxx
2. The balance sheet for each year will be:
Balance Sheet as of Dec. 31, 2010
Cash
xxxx
Accounts payable
xxxx
Accounts receivable
xxxx
Notes payable
xxxx
Inventory
xxxx
Current liabilities
$60,832
Current assets
$72,651
Long-term debt
xxxxx
Net fixed assets
xxxxxx
Owners' equity
xxxxx
Total assets
$276,719
Total liab. and equity
$276,719
In the first year, equity is not given. Therefore, we must calculate equity as a plug variable. Since total liabilities and equity is equal to total assets, equity can be calculated as:
Equity = $276,719 – 60,832 – 103,006
Equity = $112,881
Balance Sheet as of Dec. 31, 2011
Cash
xxxx
Accounts payable
xxxx
Accounts receivable
xxxx
Notes payable
xxxx
Inventory
xxxx
Current liabilities
$68,121
Current assets
$100,834
Long-term debt
xxxx
Net fixed assets
xxxx
Owners' equity
Xxxx(see below)
Total assets
$349,459
Total liab. and equity
$349,459
The owner’s equity for 2011 is the beginning of year owner’s equity, plus the addition to retained earnings, plus the new equity, so:
Equity = $112,881 + 31,623 + 20,500
Equity = $165,004
3-6 are completed for you so you can answer the questions
3. Using the OCF equation: (
OCF = EBIT + Depreciation – Taxes
The OCF for each year is:
OCF2010 = $79,110 + 46,255 – 13,811
OCF2010 = $111,554
OCF2011 = $90,584 + 52,282 – 15,812
OCF2011 = $127,054
4.
To calculate the cash flow from assets, we need to find the capital spending and change in net working capital. The capital spending for the year was:
Capital spending
Ending net fixed assets
$248,625
– Beginning net fixed assets
204,068
+ Depreciation
52,282
Net capital spending
$96,839
And the change in net working capital was:
Change in net working capital
Ending NWC
$32,713
– Beginning NWC
11,819
Change in NWC
$20,894
So, the cash flow from assets was:
Cash flow from assets
Operating cash flow
$127,054
– Net capital spending
96,839
– Change in NWC
...
This slide set is a work in progress and is embedded in my Principles of Finance course, which is also a work in progress, that I teach to computer scientists and engineers
http://awesomefinance.weebly.com/
CHAPTER 3Understanding Regulations, Accreditation Criteria, and .docxtiffanyd4
CHAPTER 3
Understanding Regulations, Accreditation Criteria, and Other Standards ofPractice
NAEYC Administrator Competencies Addressed in This Chapter:
Management Knowledge and Skills
2. Legal and Fiscal Management
· Knowledge and application of the advantages and disadvantages of different legal structures
· Knowledge of different codes and regulations as they relate to the delivery of early childhood program services
· Knowledge of child custody, child abuse, special education, confidentiality, anti-discrimination, insurance liability, contract, and laborlaws pertaining to program management
5. Program Operations and Facilities Management
· Knowledge and application of policies and procedures that meet state/local regulations and professional standards pertaining to thehealth and safety of young children
7. Marketing and public relations
· Skill in developing a business plan and effective promotional literature, handbooks, newsletters, and press releases
Early Childhood Knowledge and Skills
5. Children with Special Needs
· Knowledge of licensing standards, state and federal laws (e.g., ADA, IDEA) as they relate to services and accommodations for childrenwith special needs
10. Professionalism
· Knowledge of laws, regulations, and policies that impact professional conduct with children and families
· Knowledge of center accreditation criteria
Learning Outcomes
After studying this chapter, you will be able to:
1. Describe the purpose of regulations that apply to programs of early care and education and list several topics they address.
2. Identify several ways accreditation standards are different from child care regulations.
3. State the purpose of Quality Rating and Improvement Systems (QRIS).
4. List some ways qualifications for administrators and teachers are different for licensure, for accreditation, and in QRIS systems.
5. Identify laws that apply to the childcare workplace, such as those that govern the program’s financial management and employees’well-being.
Marie’s Experience
Marie has been successful over the years in keeping her center in compliance with all licensing regulations. She is proud of her teachers andconfident that the center consistently goes above and beyond licensing provisions designed simply to keep children healthy and safe. She knowsthat the center provides high-quality care to the children it serves, but has never pursued accreditation or participated in her state’s optionalQuality Rating and Improvement System (QRIS) because of the time and effort it would require. Her families have confidence in her program anddo not seem to need this additional assurance that it provides high-quality services day in and day out.
Large numbers of families rely on out-of-home care for their infants, toddlers, preschoolers, and school-age children during the workday. In2011, there were 312,254 licensed child care facilities with a capacity to serve almost 10.2 million children. About 34% of these facilitieswere child care center.
Chapter 3 Human RightsINTERNATIONAL HUMAN RIGHTS–BASED ORGANIZ.docxtiffanyd4
Chapter 3 Human Rights
INTERNATIONAL HUMAN RIGHTS–BASED ORGANIZATIONS LIKE THE UN COMMISSION ON HUMAN RIGHTS HAVE MADE MONITORING HUMAN RIGHTS A GLOBAL ISSUE. The United Nations is headquartered in New York City.
Learning Objectives
1. 3.1Review the expansion of and the commitment to the human rights agenda
2. 3.2Evaluate the milestones that led to the current concerns around human rights
3. 3.3Evaluate some of the philosophical controversies over human rights
4. 3.4Recognize global, regional, national, and local institutions and rules designed to protect human rights across the globe
5. 3.5Report the efforts made globally in bringing violators of human rights to justice
6. 3.6Relate the need for stricter laws to protect women’s human rights across the globe.
7. 3.7Recognize the need to protect the human rights of the disabled
8. 3.8Distinguish between the Western and the Islamic beliefs on individual and community rights
9. 3.9Review the balancing act that needs to be played while fighting terrorism and protecting human rights
10. 3.10Report the controversy around issuing death penalty as punishment
When Muammar Qaddafi used military force to suppress people demonstrating in Libya for a transition to democracy, there was a general consensus that there was a global responsibility to protect civilians. However, when Bashar Assad used fighter jets, tanks, barrel bombs, chemical weapons, and a wide range of brutal methods, including torture, to crush the popular uprising against his rule in Syria, the world did not respond forcefully to protect civilians. The basic reason given for allowing Syria to descend into brutality and chaos was that it was difficult to separate Syrians favoring human rights from those who embraced terrorism. Although cultural values differ significantly from one society to another, our common humanity has equipped us with many shared ideas about how human beings should treat each other. Aspects of globalization, especially communications and migration, reinforce perceptions of a common humanity. In general, there is global agreement that human beings, simply because we exist, are entitled to at least three types of rights. First is civil rights, which include personal liberties such as freedom of speech, religion, and thought; the right to own property; and the right to equal treatment under the law. Second is political rights, including the right to vote, to voice political opinions, and to participate in the political process. Third is social rights, including the right to be secure from violence and other physical danger, the right to a decent standard of living, and the right to health care and education. Societies differ in terms of which rights they emphasize. Four types of human rights claims that dominate global politics are
1. The abuse of individual rights by governments
2. Demands for autonomy or independence by various groups
3. Demands for equality and privacy by groups with unconventional lifestyles
4. Cla.
CHAPTER 13Contributing to the ProfessionNAEYC Administrator Co.docxtiffanyd4
CHAPTER 13
Contributing to the Profession
NAEYC Administrator Competencies Addressed in This Chapter:
Management Knowledge and Skills
1. Personal and Professional Self-Awareness
· The ability to evaluate ethical and moral dilemmas based on a professional code of ethics
8. Leadership and Advocacy
· Knowledge of the legislative process, social issues, and public policy affecting young children and their families
· The ability to advocate on behalf of young children, their families and the profession
Early Childhood Knowledge and Skills
1. Historical and Philosophical Foundations
· Knowledge of research methodologies
10. Professionalism
· Knowledge of different professional organizations, resources, and issues impacting the welfare of early childhood practitioners
· Ability to make professional judgments based on the NAEYC “Code of Ethical Conduct and Statement of Commitment”
· Ability to work as part of a professional team and supervise support staff or volunteers
Learning Outcomes
After studying this chapter, you will be able to:
1. Describe how the field of early childhood education has made progress achieving two of the eight criteria of professional status.
2. Identify the advocacy tools that early childhood advocates should have at their disposal.
3. Discuss opportunities that program administrators have to contribute to the field’s future.
Grace’s Experience
Grace had found that working with children came naturally, and she considered herself to be a gifted teacher after only a short time in theclassroom. She thought she would spend her entire career working directly with children. She is now somewhat surprised how much she isenjoying the new responsibilities that come with being a program director. She is gaining confidence that she can work effectively with allfamilies, even when faced with difficult conversations; and her skills as a supervisor, coach, and mentor are increasing as well. She is nowcomfortable as a leader in her own center and is considering volunteering to fill a leadership role in the local early childhood professionalorganization. That would give her opportunities to refine her leadership skills while contributing to the quality of care provided for childrenthroughout her community.
Early childhood administrators are leaders. They contribute to the profession by making the public aware of the field’s emergingprofessionalism, including its reliance on a code of ethics; engaging in informed advocacy; becoming involved in research to increase whatwe know about how children learn, grow, and develop; and coaching and mentoring novices, experienced practitioners, and emergingleaders.
13.1 PROMOTING PROFESSIONALIZATION1
Lilian Katz, one of the most influential voices in the field of early care and education, began discussions about the professionalism of thefield in the mid-1980s. Her work extended a foundation that had been laid by sociologists, philosophers, and other scholars and continuesto influence how early childhoo.
Chapter 2 The Law of EducationIntroductionThis chapter describ.docxtiffanyd4
Chapter 2 The Law of Education
Introduction
This chapter describes the various agencies and types of law that affect education. It also discusses the organization and functions of the various judicial bodies that have an impact on education. School leadership candidates are introduced to standards of review, significant federal civil rights laws, the contents of legal decisions, and a sample legal brief.
Focus Questions
1. How are federal courts organized, and what kind of decisions do they make?
2. What is law? How is law different from policy?
3. From what source does the authority of local boards of education emanate?
4. How can campus and district leaders remain current with changes in law and policy at the national and state level?
Key Terms
1.
2.
3.
4. En banc
5.
6.
7.
8.
9.
10.
11. Stare decisis
12.
13.
14.
15.
Case Study Confused Yet?
As far as Elise Daniels was concerned, the monthly meeting of the 20 River County middle school principals was the most informative and relaxing activity in her school year. Twice per year, the principals invited a guest to speak to the group. Elise was particularly interested in the fall special guest speaker, the attorney for the state school boards association. Elise had heard him speak several times, so she was aware of his deep knowledge of school law and emerging issues. As the attorney, spoke Elise found herself becoming more anxious. It was as if the attorney was speaking a foreign language. Tinker rules, due process, Title IX, Office of Civil Rights, and the state bullying law. Elise found herself thinking, “The Americans with Disabilities Act has been amended? How am I supposed to keep up with all of this?”
Leadership Perspectives
Middle School Principal Elise Daniels in the case study “Confused Yet?” is correct. School law can be confusing. Educators work in a highly regulated environment directly and indirectly impacted by a wide variety of local, state, and federal authorities. When P–12 educators refer to “the law,” they are often referring to state and/or federal statutes enacted by legislatures (). This understanding is correct. The U.S. Congress and 50 state legislatures are active in the law-making business. To make matters more difficult, the law is constantly changing and evolving as new situations arise. For example, 10 years ago few if any states had passed antibullying laws. By 2008, however, almost every state had some form of antibullying legislation on the books. Soon after, the phenomenon of cyberbullying emerged, and state legislators rushed to add cyberbullying and/or electronic bullying to their state education laws. One can only guess at what new real or perceived problem affecting public P–12 schools will be next.
P–12 educators also refer to school board policy as “law.” However, law and policy are not necessarily identical. , p. 4) defines policy as “one way through which a political system handles a public problem. It includes a government’s expressed inten.
CHAPTER 1 Legal Heritage and the Digital AgeStatue of Liberty,.docxtiffanyd4
CHAPTER 1 Legal Heritage and the Digital Age
Statue of Liberty, New York Harbor
The Statue of Liberty stands majestically in New York Harbor. During the American Revolution, France gave the colonial patriots substantial support in the form of money for equipment and supplies, officers and soldiers who fought in the war, and ships and sailors who fought on the seas. Without the assistance of France, it is unlikely that the American colonists would have won their independence from Britain. In 1886, the people of France gave the Statue of Liberty to the people of the United States in recognition of friendship that was established during the American Revolution. Since then, the Statue of Liberty has become a symbol of liberty and democracy throughout the world.
Learning Objectives
After studying this chapter, you should be able to:
1. Define law.
2. Describe the functions of law.
3. Explain the development of the U.S. legal system.
4. List and describe the sources of law in the United States.
5. Discuss the importance of the U.S. Supreme Court’s decision in Brown v. Board of Education.
Chapter Outline
1. Introduction to Legal Heritage and the Digital Age
2. What Is Law?
1. Landmark U.S. Supreme Court Case • Brown v. Board of Education
3. Schools of Jurisprudential Thought
1. CASE 1.1 • U.S. Supreme Court Case • POM Wonderful LLC v. Coca-Cola Company
2. Global Law • Command School of Jurisprudence of Cuba
4. History of American Law
1. Landmark Law • Adoption of English Common Law in the United States
2. Global Law • Civil Law System of France and Germany
5. Sources of Law in the United States
1. Contemporary Environment • How a Bill Becomes Law
2. Digital Law • Law of the Digital Age
6. Critical Legal Thinking
1. CASE 1.2 • U.S. Supreme Court Case • Shelby County, Texas v. Holder
“ Where there is no law, there is no freedom.”
—John Locke Second Treatise of Government, Sec. 57
Introduction to Legal Heritage and the Digital Age
In the words of Judge Learned Hand, “Without law we cannot live; only with it can we insure the future which by right is ours. The best of men’s hopes are enmeshed in its success.”1 Every society makes and enforces laws that govern the conduct of the individuals, businesses, and other organizations that function within it.
Although the law of the United States is based primarily on English common law, other legal systems, such as Spanish and French civil law, also influence it. The sources of law in this country are the U.S. Constitution, state constitutions, federal and state statutes, ordinances, administrative agency rules and regulations, executive orders, and judicial decisions by federal and state courts.
Human beings do not ever make laws; it is the accidents and catastrophes of all kinds happening in every conceivable way that make law for us.
Plato
Laws IV, 709
Businesses that are organized in the United States are subject to its laws. They are also subject to the laws of other countries in which they operate. Busin.
CHAPTER 1 BASIC CONCEPTS AND DEFINITIONS OF HUMAN SERVICESPAUL F.docxtiffanyd4
CHAPTER 1 BASIC CONCEPTS AND DEFINITIONS OF HUMAN SERVICES
PAUL F. CIMMINO
This chapter is dedicated to the development of basic definitions that describe and identify human services. However, any attempt to define human services in one sentence, or to use one description, is doomed to fail. According to Schmolling, Youkeles, and Burger, there is no generally accepted or “official” definition of human services (, p. 9). Human services is a multidisciplinary profession that reflects complex human interactions and a comprehensive social system. To understand human services, it is important to develop ideas that construct an organized perspective of the field. In this chapter, three general questions about human services are incorporated into the text. First, “What is it, and what isn’t it?” Second, “Who is helped and why?” Third, “How is help delivered and by whom?” These fundamental questions tend to exemplify the basic concepts and definitions in human services. This chapter proceeds to introduce important terms, definitions, subconcepts, and concentration areas in human services, which are expounded upon by a host of authors who have contributed their expertise to create this book.
The professional field of human services can be reduced to three basic concepts: intervention (needs and services); professionalism (applied practice and credentialing); and education (academic training and research). Each basic concept comprises important aspects of the human service field and identifies primary areas of the profession. The supporting background that nourishes intervention, professionalism, and education in human services is the history of the human service movement (Fullerton, ). The formal development of human services in society is located in the legislative, training, and service history of the field. This chapter attempts to offer a collective understanding of these important areas related to the professional development of human services. In this chapter, basic concepts and definitions converge to generate a comprehensive and theoretical notion of human services in forming an overview of the field. To further assist the reader in developing thoughts about the human service profession, and to avoid ambiguity in the field, a medley of contemporary definitions of human services is presented later in the chapter.
Finally, an important letter written by Dr. Harold McPheeters in 1992, which addresses the basic question of what comprises human services, is presented to close the chapter. McPheeters’s letter was sent in response to a manuscript written by me in 1991. The paper proposes an idealistic model that defines human services in terms of its purpose and professional responsibility in society. Later in the chapter, the central ideas are summarized, providing an orientation to the thoughtful feedback from Harold McPheeters. In my view, his written response conveys landmark perspectives in development of the emerging human service field. Thus, .
CHAPTER 20 Employment Law and Worker ProtectionWashington DC.docxtiffanyd4
CHAPTER 20 Employment Law and Worker Protection
Washington DC
Federal and state laws provide workers’ compensation and occupational safety laws to protect workers in the United States.
Learning Objectives
After studying this chapter, you should be able to:
1. Explain how state workers’ compensation programs work and describe the benefits available.
2. Describe employers’ duty to provide safe working conditions under the Occupational Safety and Health Act.
3. Describe the minimum wage and overtime pay rules of the Fair Labor Standards Act.
4. Describe the protections afforded by the Family and Medical Leave Act.
5. Describe unemployment insurance and Social Security.
Chapter Outline
1. Introduction to Employment Law and Worker Protection
2. Workers’ Compensation
1. Case 20.1 • Kelley v. Coca-Cola Enterprises, Inc.
3. Occupational Safety
1. Case 20.2 • R. Williams Construction Company v. Occupational Safety and Health Review Commission
4. Fair Labor Standards Act
1. Case 20.3 U.S. SUPREME COURT Case • IBP, Inc. v. Alvarez
5. Family and Medical Leave Act
6. Consolidated Omnibus Budget Reconciliation Act and Employee Retirement Income Security Act
7. Government Programs
“ It is difficult to imagine any grounds, other than our own personal economic predilections, for saying that the contract of employment is any the less an appropriate subject of legislation than are scores of others, in dealing with which this Court has held that legislatures may curtail individual freedom in the public interest.”
—Stone, Justice Dissenting opinion, Morehead v. New York (1936)
Introduction to Employment Law and Worker Protection
Generally, the employer–employee relationship is subject to the common law of contracts and agency law. This relationship is also highly regulated by federal and state governments that have enacted myriad laws that protect workers from unsafe working conditions, require employers to provide workers’ compensation to employers injured on the job, prohibit child labor, require minimum wages and overtime pay to be paid to workers, require employers to provide time off to employees with certain family and medical emergencies, and provide other employee protections and rights.
Poorly paid labor is inefficient labor, the world over.
Henry George
This chapter discusses employment law, workers’ compensation, occupational safety, pay and hour rules, and other laws affecting employment.
Workers’ Compensation
Many types of employment are dangerous, and many workers are injured on the job each year. Under common law, employees who were injured on the job could sue their employers for negligence. This time-consuming process placed the employee at odds with his or her employer. In addition, there was no guarantee that the employee would win the case. Ultimately, many injured workers—or the heirs of deceased workers—were left uncompensated.
Workers’ compensation acts were enacted by states in response to the unfairness of that result. These acts crea.
Chapter 1 Global Issues Challenges of GlobalizationA GROWING .docxtiffanyd4
Chapter 1 Global Issues: Challenges of Globalization
A GROWING WORLDWIDE CONNECTEDNESS IN THE AGE OF GLOBALIZATION HAS GIVEN CITIZENS MORE OF A VOICE TO EXPRESS THEIR DISSATISFACTION. In Brazil, Protestors calling for a wide range of reforms marched toward the soccer stadium where a match would be played between Brazil and Uruguay.
Learning Objectives
1. 1.1Identify important terms in international relations
2. 1.2Report the need to adopt an interdisciplinary approach in understanding the impact of new world events
3. 1.3Examine the formation of the modern states with respect to the thirty years’ war in 1618
4. 1.4Recall the challenges to the four types of sovereignty
5. 1.5Report that the European Union was created by redefining the sovereignty of its nations for lasting peace and security
6. 1.6Recall the influence exerted by the Catholic church, transnational companies, and other NGOs in dictating world events
7. 1.7Examine how globalization has brought about greater interdependence between states
8. 1.8Record the major causes of globalization
9. 1.9Review the most important forms of globalization
10. 1.10Recount the five waves of globalization
11. 1.11Recognize reasons as to why France and the US resist globalization
12. 1.12Examine the three dominant views of the extent to which globalization exists
Revolutions in technology, finance, transportation, and communications and different ways of thinking that characterize interdependence and globalization have eroded the power and significance of nation-states and profoundly altered international relations. Countries share power with nonstate actors that have proliferated as states have failed to deal effectively with major global problems.
Many governments have subcontracted several traditional responsibilities to private companies and have created public-private partnerships in some areas. This is exemplified by the hundreds of special economic zones in China, Dubai, and elsewhere. Contracting out traditional functions of government, combined with the centralization of massive amounts of data, facilitated Edward Snowden’s ability to leak what seems to be an almost unlimited amount of information on America’s spying activities.
The connections between states and citizens, a cornerstone of international relations, have been weakened partly by global communications and migration. Social media enable people around the world to challenge governments and to participate in global governance. The prevalence of mass protests globally demonstrates growing frustration with governments’ inability to meet the demands of the people, especially the global middle class.
The growth of multiple national identities, citizenships, and passports challenges traditional international relations. States that played dominant roles in international affairs must now deal with their declining power as global power is more diffused with the rise of China, India, Brazil, and other emerging market countries. States are i.
CHAPTER 23 Consumer ProtectionRestaurantFederal and state go.docxtiffanyd4
CHAPTER 23 Consumer Protection
Restaurant
Federal and state governments have enacted many statutes to protect consumers from unsafe food items.
Learning Objectives
After studying this chapter, you should be able to:
1. Describe government regulation of food and food additives.
2. Describe government regulation of drugs, cosmetics, and medicinal devices.
3. Identify and describe unfair and deceptive business practices.
4. Describe the United Nations Biosafety Protocol concerning genetically altered foods.
5. List and describe consumer financial protection laws.
Chapter Outline
1. Introduction to Consumer Protection
2. Food Safety
1. Case 23.1 • United States of America v. LaGrou Distribution Systems, Incorporated
3. Food, Drugs, and Cosmetics Safety
1. LANDMARK LAW • Food, Drug, and Cosmetic Act
2. ETHICS • Restaurants Required to Disclose Calories of Food Items
3. GLOBAL LAW • United Nations Biosafety Protocol for Genetically Altered Foods
4. Product and Automobile Safety
5. Medical and Health Care Protection
1. LANDMARK LAW • Health Care Reform Act of 2010
6. Unfair and Deceptive Practices
1. CONTEMPORARY ENVIRONMENT • Do-Not-Call Registry
7. Consumer Financial Protection
1. CONTEMPORARY ENVIRONMENT • Consumer Financial Protection Bureau
2. ETHICS • Credit CARD Act
3. BUSINESS ENVIRONMENT • Dodd-Frank Wall Street Reform and Consumer Protection Act
“ I should regret to find that the law was powerless to enforce the most elementary principles of commercial morality.”
—Lord Herschell Reddaway v. Banham (1896)
Introduction to Consumer Protection and Product Safety
Originally, sales transactions in this country were guided by the principle of caveat emptor(“let the buyer beware”). This led to abusive practices by businesses that sold adulterated food products and other unsafe products. In response, federal and state governments have enacted a variety of statutes that regulate the safety of food, drugs, cosmetics, toys, vehicles, and other products. In addition, governments have enacted consumer financial protection laws that protect consumer-debtors in credit transactions. These laws are collectively referred to as consumer protection laws .
consumer protection laws
Federal and state statutes and regulations that promote product safety and prohibit abusive, unfair, and deceptive business practices.
This chapter covers consumer protection and product safety laws.
Food Safety
The safety of food is an important concern in the United States and worldwide. In the United States, the U.S. Department of Agriculture (USDA) is the federal administrative agency that is responsible primarily for regulating meat, poultry, and other food products. The USDA conducts inspections of food-processing and storage facilities. The USDA can initiate legal proceedings against violators.
U.S. Department of Agriculture (USDA)
A federal administrative agency that is responsible for regulating the safety of meat, poultry, and other food products.
The following case involve.
Chapter 18 When looking further into the EU’s Energy Security and.docxtiffanyd4
Chapter 18
: When looking further into the EU’s Energy Security and ICT sustainable urban development, and government policy efforts:
Q2
– What are the five ICT enablers of energy efficiency identified by European strategic research Road map to ICT enabled Energy-Efficiency in Buildings and constructions, (REEB, 2010)?
identify and name those
five ICT enablers
,
provide a brief narrative for each enabler,
note:
Need 400 words. Need references
Please find the attached
.
CHAPTER 17 Investor Protection and E-Securities TransactionsNe.docxtiffanyd4
CHAPTER 17 Investor Protection and E-Securities Transactions
New York Stock Exchange
This is the home of the New York Stock Exchange (NYSE) in New York City. The NYSE, nicknamed the Big Board, is the premier stock exchange in the world. It lists the stocks and securities of approximately 3,000 of the world’s largest companies for trading. The origin of the NYSE dates to 1792, when several stockbrokers met under a buttonwood tree on Wall Street. The NYSE is located at 11 Wall Street, which has been designated a National Historic Landmark. The NYSE is now operated by NYSE Euronext, which was formed when the NYSE merged with the fully electronic stock exchange Euronext.
Learning Objectives
After studying this chapter, you should be able to:
1. Describe the procedure for going public and how securities are registered with the Securities and Exchange Commission (SEC).
2. Describe e-securities transactions and public offerings.
3. Describe the requirements for qualifying for private placement, intrastate, and small offering exemptions from registration.
4. Describe insider trading that violates Section 10(b) of the Securities Exchange Act of 1934.
5. Describe the changes made to securities law by the Jumpstart Our Business Startups (JOBS) Act and its effect on raising capital by small businesses.
Chapter Outline
1. Introduction to Investor Protection and E-Securities Transactions
2. Securities Law
1. LANDMARK LAW • Federal Securities Laws
3. Definition of Security
4. Initial Public Offering: Securities Act of 1933
1. BUSINESS ENVIRONMENT • Facebook’s Initial Public Offering
2. CONTEMPORARY ENVIRONMENT • Jumpstart Our Business Startups (JOBS) Act: Emerging Growth Company
5. E-Securities Transactions
1. DIGITAL LAW • Crowdfunding and Funding Portals
6. Exempt Securities
7. Exempt Transactions
8. Trading in Securities: Securities Exchange Act of 1934
9. Insider Trading
1. Case 17.1 • United States v. Bhagat
2. Case 17.2 • United States v. Kluger
3. ETHICS • Stop Trading on Congressional Knowledge Act
10. Short-Swing Profits
11. State “Blue-Sky” Laws
“The insiders here were not trading on an equal footing with the outside investors.”
—Judge Waterman Securities and Exchange Commission v. Texas Gulf Sulphur Company 401 F.2d 833, 1968 U.S. App. Lexis 5796 (1968)
Introduction to Investor Protection and E-Securities Transactions
Prior to the 1920s and 1930s, the securities markets in this country were not regulated by the federal government. Securities were issued and sold to investors with little, if any, disclosure. Fraud in these transactions was common. To respond to this lack of regulation, in the early 1930s Congress enacted federal securities statutes to regulate the securities markets, including the Securities Act of 1933 and the Securities Exchange Act of 1934. The federal securities statutes were designed to require disclosure of information to investors, provide for the regulation of securities issues and trading, and prevent fraud. Today, many .
Chapter 13 Law, Ethics, and Educational Leadership Making the Con.docxtiffanyd4
Chapter 13 Law, Ethics, and Educational Leadership: Making the Connection
Introduction
This chapter presents examples from the ISLLC standards of the relationship between law and ethics. The chapter also provides examples of how knowledge of law and the application of ethical principles to decision making helps guide school leaders through the sometimes treacherous waters of educational leadership.
Focus Questions
1. How may ethical considerations and legal knowledge guide school leader decision making?
2. Why is it important to consider a balance between these two sometimes competing concepts?
Case Study So Many Detentions, So Little Time
Jefferson Middle School (JMS) was the most racially and culturally diverse of the three middle schools in Riverboat School District, a relatively affluent bedroom community within commuter distance of Capital City. Unfortunately, the culture of Jefferson Middle School was not going well. Over the past 5 years, assistant superintendent Sharon Grey had seen JMS become a school divided by an underlying animosity along racial and socioeconomic lines. This animosity was characterized by numerous clashes between student groups, between teachers and students, between campus administrators and teachers, and between teachers and parents. Sharon finally concluded that JMS was a “mess.”
After much thought and a few sleepless nights, Sharon as part of her job description made the recommendation to the Riverboat school board to not reemploy Jeremy Smith as principal of JMS. Immediately after the board decision, Sharon organized a search committee of teachers, parents, and campus administrators and began the process of finding the right principal for JMS. The committee finally agreed on Charleston Jones. Charleston was a relatively inexperienced campus administrator but had impressed the committee with his instructional leadership knowledge, intelligence, and youthful energy. However, the job of stabilizing JMS was proving to be more of a challenge than anyone had anticipated.
Charleston had instituted a schoolwide discipline plan and had insisted that teachers and school administrators not deviate from the plan. However, he could sense that things were still not right. Animosity among student and parent groups remained just below the surface, ready to erupt at the slightest provocation. Clashes between teachers and students were still relatively frequent. Teachers still blamed one another, school administrators, and the school resource officer for a lack of order in the school. Change was not coming quickly to RMS, and Charleston understood that although school management had improved, several aspects of school culture were less than desirable. Student suspension rates remained high, and parental support was waning. As one of the assistant principals remarked after the umpteenth student referral, “So many detentions, so little time!”
Charleston felt the need to talk. He reached for the phone and made an appointment with.
Chapter 12 presented strategic planning and performance with Int.docxtiffanyd4
Chapter 12 presented strategic planning and performance with Intuit. Define Key Performance Indicators (KPI) and Key Risk Indicators (KRI)? How does an organization come up with these key indicators? Do you know of any top-down indicators? Do you know of any bottom-up indicators? Give some examples of both. In what way does identifying these indicators help an organization? Are there any other key indicators that would help an organization?
Requirements:
Initial posting by Wednesday
Reply to at least 2 other classmates by Sunday (Post a response on different days throughout the week)
Provide a minimum of 2 references on the initial post and one reference any response posts.
Proper APA Format (References & Citations)/No plagiarism
.
CHAPTER 12Working with Families and CommunitiesNAEYC Administr.docxtiffanyd4
CHAPTER 12
Working with Families and Communities
NAEYC Administrator Competencies Addressed in This Chapter:
Management Knowledge and Skills
6. Family Support
· Knowledge and application of family systems and different parenting styles
· The ability to implement program practices that support families of diverse cultural, ethnic, linguistic, and socio-economic backgrounds
· The ability to support families as valued partners in the educational process
3. Staff Management and Human Relations
· The ability to relate to staff and board members of diverse racial, cultural, and ethnic backgrounds
7. Marketing and Public Relations
· The ability to promote linkages with local schools
9. Oral and Written Communication
· Knowledge of oral communication techniques, including establishing rapport, preparing the environment, active listening, and voicecontrol
· The ability to communicate ideas effectively in a formal presentation
Early Childhood Knowledge and Skills
6. Family and Community Relationships
· Knowledge of the diversity of family systems, traditional, non-traditional and alternative family structures, family life styles, and thedynamics of family life on the development of young children
· Knowledge of socio-cultural factors influencing contemporary families including the impact of language, religion, poverty, race,technology, and the media
· Knowledge of different community resources, assistance, and support available to children and families
· Knowledge of different strategies to promote reciprocal partnerships between home and center
· Ability to communicate effectively with parents through written and oral communication
· Ability to demonstrate awareness and appreciation of different cultural and familial practices and customs
· Knowledge of child rearing patterns in other countries
10. Professionalism
· Ability to make professional judgments based on the NAEYC “Code of Ethical Conduct and Statement of Commitment”
Learning Outcomes
After studying this chapter, you will be able to:
1. Explain three approaches that programs of early care and education might take to working with families.
2. Identify some of the benefits enjoyed by children, families, and programs when families are engaged with the programs serving theiryoung children.
3. Describe some effective strategies for building trusting relationships with all families.
4. Identify the stakeholder groups and the kinds of expertise that should be represented on programs’ advisory committees and boardsof directors.
Grace’s Experience
The program that Grace directs has been an important part of the neighborhood for more than 20 years. She knows she is benefiting from thegoodwill it has earned over the years. It is respected because of its tradition of high-quality outreach projects, such as the sing-along the childrenpresent at the senior center in the spring. The program’s tradition of community involvement has meant that local businesses have always beenwilling to help out when asked fo.
Chapter 10. Political Socialization The Making of a CitizenLear.docxtiffanyd4
Chapter 10. Political Socialization: The Making of a Citizen
Learning Objectives
· 1Describe the model citizen in democratic theory and explain the concept.
· 2Define socialization and explain the relevance of this concept in the study of politics.
· 3Explain how a disparate population of individuals and groups (families, clans, and tribes) can be forged into a cohesive society.
· 4Demonstrate how socialization affects political behavior and analyze what happens when socialization fails.
· 5Characterize the role of television and the Internet in influencing people’s political beliefs and behavior, and evaluate their impact on the quality of citizenship in contemporary society.
The year is 1932. The Soviet Union is suffering a severe shortage of food, and millions go hungry. Joseph Stalin, leader of the Communist Party and head of the Soviet government, has undertaken a vast reordering of Soviet agriculture that eliminates a whole class of landholders (the kulaks) and collectivizes all farmland. Henceforth, every farm and all farm products belong to the state. To deter theft of what is now considered state property, the Soviet government enacts a law prohibiting individual farmers from appropriating any grain for their own private use. Acting under this law, a young boy reports his father to the authorities for concealing grain. The father is shot for stealing state property. Soon after, the boy is killed by a group of peasants, led by his uncle, who are outraged that he would betray his own father. The government, taking a radically different view of the affair, extols the boy as a patriotic martyr.
Stalin considered the little boy in this story a model citizen, a hero. How citizenship is defined says a lot about a government and the philosophy or ideology that underpins it.
The Good Citizen
Stalin’s celebration of a child’s act of betrayal as heroic points to a distinction Aristotle originally made: The good citizen is defined by laws, regimes, and rulers, but the moral fiber (and universal characteristics) of a good person is fixed, and it transcends the expectations of any particular political regime.*
Good citizenship includes behaving in accordance with the rules, norms, and expectations of our own state and society. Thus, the actual requirements vary widely. A good citizen in Soviet Russia of the 1930s was a person whose first loyalty was to the Communist Party. The test of good citizenship in a totalitarian state is this: Are you willing to subordinate all personal convictions and even family loyalties to the dictates of political authority, and to follow the dictator’s whims no matter where they may lead? In marked contrast are the standards of citizenship in constitutional democracies, which prize and protect freedom of conscience and speech.
Where the requirements of the abstract good citizen—always defined by the state—come into conflict with the moral compass of actual citizens, and where the state seeks to obscure or obliterate t.
Chapters one and twoAnswer the questions in complete paragraphs .docxtiffanyd4
Chapters one and two
Answer the questions in complete paragraphs (at least 3), APA style (citations/references) and make sure to separate/number the answers
1. Explain the differences between Classic Autism and Asperger Disorder according to the DSM-V (Diagnostic Statistical Manual of the American Psychiatric Association).
2. How is ASD identified and diagnosed? Name and describe some of the measurement tools.
3. Describe the characteristics of ASD under each criterion: a) language deficits, b) social differences, c) behavior, and d) motor deficits.
4. List and describe the evidence-base practices for educating ASD children discussed in chapter 2.
5. Describe the differences between a focused intervention and comprehensive treatment models.
6. What are the components of effective instruction for students with ASD?
.
ChapterTool KitChapter 1212912Corporate Valuation and Financial .docxtiffanyd4
ChapterTool KitChapter 1212/9/12Corporate Valuation and Financial Planning12-2 Financial Planning at MicroDrive, Inc.The process used by MicroDrive to forecast the free cash flows from its operating plan is described in the sections below.Setting Up the Model to Forecast OperationsWe begin with MicroDrive's most recent financial statements and selected additional data.Figure 12-1 MicroDrive’s Most Recent Financial Statements (Millions, Except for Per Share Data)INCOME STATEMENTSBALANCE SHEETS20122013Assets20122013Net sales$ 4,760$ 5,000Cash$ 60$ 50COGS (excl. depr.)3,5603,800ST Investments40-Depreciation170200Accounts receivable380500Other operating expenses480500Inventories8201,000EBIT$ 550$ 500Total CA$ 1,300$ 1,550Interest expense100120Net PP&E1,7002,000Pre-tax earnings$ 450$ 380Total assets$ 3,000$ 3,550Taxes (40%)180152NI before pref. div.$ 270$ 228Liabilities and equityPreferred div.88Accounts payable$ 190$ 200Net income$ 262$ 220Accruals280300Notes payable130280Other DataTotal CL$ 600$ 780Common dividends$48$50Long-term bonds1,0001,200Addition to RE$214$170Total liabilities$ 1,600$ 1,980Tax rate40%40%Preferred stock100100Shares of common stock5050Common stock500500Earnings per share$5.24$4.40Retained earnings800970Dividends per share$0.96$1.00Total common equity$ 1,300$ 1,470Price per share$40.00$27.00Total liabs. & equity$ 3,000$ 3,550The figure below shows all the inputs required to project the financial statements for the scenario that has been selected with the Scenario Manager: Data, What-If Analysis, Scenario Manager. There are two scenarios. The first is named Status Quo because all operating ratios except the sales growth rate are assumed to remain unchanged. The initial sales growth rate was chosen by MicroDrive's managers based on the existing product lines. The growth rate declines over time until it eventually levels off at a sustainable rate. The other scenario is named Final because it is the set of inputs chosen by MicroDrive's management team.Section 1 shows the inputs required to estimate the items in an operating plan. For each of these inputs, Section 1 shows the industry averages, the actual values for the past two years for MicroDrive, and the forecasted values for the next five years. The managers assumed the inputs for future years (except the sales growth rate) would be equal to the inputs in the first projected year.MicroDrive's managers assume that sales will eventually level off at a sustaniable constant rate.Sections 2 and 3 show the data required to estimate the weighted average cost of capital. Section 4 shows the forecasted growth rate in dividends.Note: These inputs are linked throughout the model. If you want to change an input, do it here and not other places in the model.Figure 12-2MicroDrive's Forecast: Inputs for the Selected ScenarioStatus QuoIndustryMicroDriveMicroDriveInputsActualActualForecast1. Operating Ratios2013201220132014201520162017201.
Chapters 4-6 Preparing Written MessagesPrepari.docxtiffanyd4
Chapters 4-6: Preparing Written Messages
Preparing Written Messages
Lesson Outline
Seven Steps to Preparing Written Messages
Effective Sentences and Coherent Paragraphs
Revise to Grab Your Audience’s Attention
Improve Readability
Proofread and Revise
Seven Steps to Preparing
Written Messages
Seven Preparation Steps
Step 1: Consider Contextual Forces
Step 2: Determine Purpose, Channel, and Medium
Step 3: Envision Audience
Step 4: Adapt Message to Audience Needs and Concerns
Step 5: Organize the Message
Step 6: Prepare First Draft
Step 7: Revise, Edit, and Proofread
Effective Sentences and
Coherent Paragraphs
Step 6: Prepare the First Draft
Proceed Deductively or Inductively
Know Logical Sequence of Minor Points
Write rapidly with Intent to Rewrite
Use Active More Than Passive Voice
Craft Powerful Sentences
Rely on Active Voice—Subject Doer of Action
(Passive—Subject Receiver of Action Sentence Is Less Emphatic)
Passive Voice Uses
Conceal the Doer/Avoid Finger Pointing
Doer Is Unknown
Place More Emphasis on What Was Done
(Receiver of Action)
5
Emphasize Important Ideas
Techniques
Sentence Structure—place important ideas in simple sentences/place in independent clauses (emphasis)
Repetition—repeat a word in a sentence
Labeling Words—use words that signal important
Position—position it first or last in a clause, sentence, paragraph, or presentation
Space and Format—use extraordinary amount of space for important items or use headings
Develop Coherent Paragraphs
Develop Deductive/Inductive Paragraphs Consistently
Link Ideas to Achieve Coherence
Keep Paragraphs Unified
Vary Sentence and Paragraph Length
Position Topic Sentences and
Link Ideas
Deductive—topic sentence precedes details
Inductive—topic sentence follows details
Link Ideas to Achieve Coherence (Cohesion)
Repeat Word from Preceding Sentence
Use a Pronoun for a Noun in Preceding Sentence
Use Connecting Words (e.g., Conjunctive Adverbs)
Link Paragraphs by Using Transition Words
Use Transition Sentences before Headings,
But Not Subheadings
Paragraph Unity
Keep Paragraphs Unified—support must be focused on topic sentences
Ensure Paragraphs Cover Topic Sentence, But Do Not Write Extraneous Materials
Arrange Paragraphs in a Logical and Systematic Sequence
Vary Sentence and
Paragraph Length
Vary Sentence Length (Average—Short)
Vary Sentence Structure (Sentence Variety)
Vary Paragraph Length (Average—Short
8-10 Lines)
Changes in Tense, Voice, and Person in Paragraphs Are Discouraged
Revise to Grab
Reader’s Attention
Cultivate a Frame of Mind (Mind-set) for Revising and Proofreading
Have Your Revising/Editing Space/Room
View from Audience Perspective (You Attitude)
Revise until No More Changes Would Improve the Document
Be Willing to Allow Others to Make Suggestions (Writer’s Pride of Ownership?)
Ensure Error-Free Messages
Use Visual Enhancements for More Readability
Add Only When They Aid Comprehension
Create an A.
Chapters 4,5 and 6Into policymaking and modeling in a comple.docxtiffanyd4
Chapters 4,5 and 6
Into policymaking and modeling in a complex world
From Building a model to adaptive robust decision- making using systems modelling
Features and added value of simulation Models using different modelling approaches supporting policymaking: A comparative analysis.
Chapter Goals and Objectives Overall – students will learn and understand
consequences of complexity in the real-world, and meaningful ways to understand and manage such situations
the implications of complexity and that many social systems are unpredictable by nature, especially when in the presence of structural change (transitions)
natural tendency to criticize the approaches that ignore difficulties and pretend to predict using simplistic models
that managing a complex system requires a good understanding of the dynamics of the system in question—to know, before they occur, some of the real possibilities that might occur and be ready so they can be reacted to as responsively as possible.
4. Policymaking and modeling in a complex world
the word “complexity” can be used to indicate a variety of kinds of difficulties
identification of complexity and uncertainty in policy-making
in very simple physical systems, interactions may give rise to complex behavior, expressed in different types of behavior, ranging from very stable to chaotic
reasons why complex adaptive systems have a strong capacity to self-organize
two of the ways systems are oversimplified: quantification and compartmentalization
models are assessed by their ability to predict/mirror observed aspects of the environments
5. From building a model to adaptive robust decision-making using systems modeling
System Dynamics Modeling and Simulation of Old
✓ methods for modeling and simulating dynamically complex systems
✓ evolutions in modeling and simulation with recent explosive growth in computational power, data, social media, to support decision-making
Recent Innovations and Expected Evolutions
✓ Why often seemingly more revolutionary—innovations have been introduced and demonstrated, but that they have not been massively adopted yet
Current and Expected Evolutions
✓ Three current evolutions expected to further reinforce - “experiential art” to “computational science.”
Future State of Practice of Systems Modeling and Simulation
✓ modeling and simulation with sparse data to modeling and simulation with (near real-time) big data;
✓ simulating and analyzing a few simulation runs to simulating and simultaneously analyzing well-selected ensembles of runs;
✓ using models for intuitive policy testing to using models as instruments for designing adaptive robust robust policies;
✓ developing educational flight simulators to fully integrated decision support.
Features and added value of simulation models using different modelling approaches to policy-making: A Comparative analysis
Foundations of Simulation Modelling
✓ model simplification definitions—smaller, less detailed, le.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
For more information, visit-www.vavaclasses.com
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
ChapterTool KitChapter 7102715Corporate Valuation and Stock Valu.docx
1. ChapterTool KitChapter 710/27/15Corporate Valuation and
Stock Valuation7-4 Valuing Common Stocks—Introducing the
Free Cash Flow (FCF) Valuation ModelData for B&B
Corporation (Millions)Constant free cash flow (FCF)
=$10Weighted average cost of capital (WACC) =10%Short-term
investments =$2Debt =$28Preferred stock =$4Number of shares
of common stock =5The first step is to estimate the value of
operations, which is the present value of all expected free cash
flows. Because the FCF's are expected to be constant, this is a
perpetuity. The present value of a perpetuity is the cash flow
divided by the cost of capital:Value of operations (Vop)
=FCF/WACCValue of operations (Vop) =$100.00millionB&B's
total value is the sum of value of operations and the short-term
investments: Value of operations$100+ ST
investments$2Estimated total intrinsic value$102The next step
is to estimate the intrinsic value of equity, which is the
remaining total value after accounting for the claims of
debtholders and preferred stockholders: Value of
operations$100+ ST investments$2Estimated total intrinsic
value$102− All debt$28− Preferred stock$4Estimated intrinsic
value of equity$70The final step is to estimate the intrinsic
common stock price per share, which is the estimated intrinsic
value of equity divided by the number of shares of common
stock: Value of operations$100+ ST investments$2Estimated
total intrinsic value$102− All debt$28− Preferred
stock$4Estimated intrinsic value of equity$70÷ Number of
shares5Estimated intrinsic stock price =$14.00The figure below
shows a summary of the previous calculations.Figure 7-2B&B
Corporation's Sources of Value and Claims on Value (Millions
of Dollars except Per Share Data)Inputs:Valuation
AnalysisConstant free cash flow (FCF) =$10Value of
operations$100Weighted average cost of capital (WACC)
=10%+ ST investments$2Short-term investments =$2Estimated
total intrinsic value$102Debt =$28− All debt$28Preferred stock
2. =$4− Preferred stock$4Number of shares of common stock
=5Estimated intrinsic value of equity$70÷ Number of
shares5Estimated intrinsic stock price$14.00Data for Pie
ChartsShort-term investments =$2Value of operations
=$100Total =$102Debt =$28Preferred stock =$4Estimated
equity value =$70Total =$1027-5 The Constant Growth Model:
Valuation when Expected Free Cash Flow Grows at a Constant
RateCase 1: The expected free cash flow at t=1 and the expected
constant growth rate after t=1 are known.First expected free
cash flow (FCF1) =$105Weighted average cost of capital
(WACC) =9%Constant growth rate (gL) =5%When free cash
flows are expected to grow at a constant rate, the value of
operations is:Value of operations (Vop) =FCF1 / [WACC-
gL]Value of operations (Vop) =$2,625Case 2: Constant growth
is expected to begin immediately.Most recent free cash flow
(FCF0) =$200Weighted average cost of capital (WACC)
=12%Constant growth rate (gL) =7%When free cash flows are
expected to grow at a constant rate, the value of operations
is:Value of operations (Vop) =[FCF0(1+gL)]/[WACC-gL]Value
of operations (Vop) =$4,2807-6 The Multi-Stage Model:
Valuation when Expected Short-Term Free Cash Flow Grows at
a Nonconstant RateThurman Corporation's expected free cash
flows are shown below.Year01234FCF−$20$80$100$110Growth
in FCF25%10%Free cash flows are expected to grow at a 5%
rate starting at Year 4 and to continue growing at a 5% rate for
the foreseeable future. We know the free cash flow at Year 4
and we know that FCF grows at a constant rate after Year 4.
Therefore, we set the horizon date at Year 4.Free cash flow at
beginning of the constant growth phase (FCF4) =$110Weighted
average cost of capital (WACC) =15%Constant growth rate (gL)
=5%HV4 = Vop, at 4 =[FCF4 (1+gL)]/ [WACC-gL]HV4 = Vop,
at 4 =$1,155Thurman's time line of expected free cash flows
and horizon value is shown
below.Year01234FCF−$20$80$100$110Horizon
value$1,155Present value of HV4 = $660.375Present value of
free cash flows = $171.745Total value of operations at Year 0,
3. Vop, at t=0 =$832.120There is more than one correct way to
find the present value of the FCFs and the horizon value. For
example, you could find the total cash flows, as shown below,
which are equal to the free cash flows except for the last period,
when they are equal to the sum of the free cash flow and the
horizon value. (It is as though you received the FCF at Year 4
and then "sold" the operations and received cash equal to the
horizon value.) You could then find present value of the
combined free cash flows and horizon
value.Year01234FCF−$20$80$100$110Horizon
value$1,155Combined FCF and
HV−$20.00$80.00$100$1,265PV of combined FCF and HV =
Total value of operations at Year 0, Vop, at t=0 =$832.12Here
is a third way to find the present value of the FCFs and the
horizon value. The basic idea is to find the value of operations
at each date. For the last date, the value of operations is the
horizon value. For the previous date, the value of operations is
equal to the present value of the sum of the next date's value of
operations and FCF. For example, if you sell the operations
immediately after receiving the FCF at Year 3, then the
purchaser would receive the FCF at Year 4 plus the value of
operations at Year 4 (which is the present value of all cash
flows beyond Year 4).
Year20182019202020212022FCF−$20.00$80.00$100.00$110.00
Horizon value$1,155Vop,t =
(FCFt+1 + Vop,t+1)/
(1+WACC)$832.12$976.94$1,043.48$1,100.00$1,155.00Option
al Material. You may have noticed that we could have defined
the horizon date at Year 3 because we have an estimate of the
Year 4 free cash flow, which is expected to grow at a constant
rate thereafter. However, we recommend defining the horizon
date as the last date in the forecast period even if growth
becomes constant at or prior to this date because we have found
that this leads to fewer errors. But we illustrate this approach
below for the interested reader.Free cash flow at beginning of
the constant growth phase (FCF4) =$110Weighted average cost
4. of capital (WACC) =15%Constant growth rate (gL) =5%HV3 =
Vop, at 3 =FCF4 / [WACC-gL]HV3 = Vop, at 3
=$1,100Thurman's time line of expected free cash flows and
horizon value is shown
below.Year0123FCF−$20$80$100Horizon value$1,100Present
value of HV4 = $723.268Present value of free cash flows =
$108.852Total value of operations at Year 0, Vop, at t=0
=$832.120Following is a summary of the steps used in
estimating Thurman Corporation's value of operations.Figure 7-
3Thurman Corporation's Value of Operations (Millions of
Dollars)INPUTS:gL = 5%WACC
=15%ProjectionsYear01234FCF−$20.00$80.00$100.00$110.00
⟶⟶ ⟶↴ ↓↓↓↓↓FCF1FCF2FCF3FCF4HV =
Vop(t=4)────────────────────────↓(1+WACC)1(
1+WACC)2(1+WACC)3(1+WACC)4 FCF4(1+gL)↓↓↓↓
───────── ↓↓↓↓ (WACC− gL)↓↓↓↓↓↓↓↓↓$115.500PVs of
FCFs−$17.391⟵
⟵
⤶ ↓↓↓10.00%$60.491⟵
⟵
⟵
⟵
⟵
⤶ ↓↓↓$65.752⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⤶ ↓
$1,155.000$62.893⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⤶ ↓PV of
HV$660.375⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
$1,155.000 ⟵
⟵
⟵
⤶ ↓=
────── Vop =$832.12(1+WACC)47-7 Application of the
FCF Valuation Model to MicroDriveWe begin with
MicroDrive's most recent financial statements and selected
additional data.Figure 7-4 MicroDrive’s Most Recent Financial
Statements (Millions, Except for Per Share Data)INCOME
STATEMENTSBALANCE
SHEETS20152016Assets20152016Net sales$ 4,760$
5,000Cash$ 60$ 50COGS (excl. depr.)3,5603,800ST
Investments400Depreciation170200Accounts
receivable380500Other operating
expenses480500Inventories8201,000EBIT$ 550$ 500Total
CA$ 1,300$ 1,550Interest expense100120Net
PP&E1,7002,000Pre-tax earnings$ 450$ 380Total assets$
3,000$ 3,550Taxes (40%)180152NI before pref. div.$ 270$
228Liabilities and EquityPreferred div.88Accounts payable$
190$ 200Net income$ 262$ 220Accruals280300Notes
5. payable130280Other DataTotal CL$ 600$ 780Common
dividends$48$50Long-term bonds1,0001,200Addition to
RE$214$170Total liabilities$ 1,600$ 1,980Tax
rate40%40%Preferred stock100100Shares of common
stock5050Common stock500500Price per
share$40.00$27.00Retained earnings800970Total common
equity$ 1,300$ 1,470Weighted average
cost of capital (WACC)Total liabs. & equity$ 3,000$
3,55010.50%10.97%The first step is to calculate the key
performance measures that determine free cash flows. Figure 7-
5Key Performance Measures for MicroDrive (Millions of
Dollars)MicroDriveIndustry201520162016Calculating Net
Operating Profit after Taxes (NOPAT)NOPAT = EBIT(1 −
T)$330$300Calculating Net Operating Working Capital
(NOWC)Operating current assets$1,260$1,550− Operating
current liabilities$470$500NOWC$790$1,050Calculating Total
Net Operating Capital (OpCap)NOWC$790$1,050+ Net
PP&E$1,700$2,000OpCap$2,490$3,050Investment in operating
capital$560Calculating Free Cash Flow (FCF)FCF = NOPAT –
Investment in operating capital−$260Calculating Return on
Invested Capital (ROIC)ROIC = NOPAT/Total net operating
capital13.25%9.84%15.04%Calculating the Operating
Profitability Ratio (OP)OP =
NOPAT/Sales6.93%6.00%6.92%Calculating the Capital
Requirement Ratio (CR)CR = (Total net operating
capital)/Sales52.31%61.00%46.00%The next step is to forecast
sales, NOPAT, and total net operating capital. We do this by
estimating future sales' growth rates, operating profitability
ratios, and capital requirement ratios, as shown in Panel A in
the Figure below.Yearly sales are forecast by letting the
previous year's sales increase by the forecasted sales growth
rate. Operating profitability and total net operating capital in a
forecasted year are assumed to be proportional to sales in that
year.Figure 7-6MicroDrive's Forecast of Operations for the
Selected Scenario (Millions of Dollars, Except for Per Share
Data)Status QuoIndustryMicroDriveMicroDrivePanel
6. A:ActualActualForecastOperating
Ratios20162015201620172018201920202021g = Sales growth
rate15%5%10%8%7%5%5%OP =
NOPAT/Sales6.92%6.9%6%6%6%6%6%6%CR =
OpCap/Sales46.0%52.3%61%61%61%61%61%61%Tax
rate40%40%40%40%40%40%40%40%Panel
B:ActualForecastOperating
Items201620172018201920202021Net
sales$5,000$5,500$5,940$6,356$6,674$7,007.270Net operating
profit after taxes$300$330$356$381$400$420.436Total net
operating capital
(OpCap)$3,050$3,355$3,623$3,877$4,071$4,274.434FCF =
NOPAT – Investment in
OpCap−$260$25$88$128$207$216.892Growth in
FCF252%45.1%61.7%5.0%ROIC =
NOPAT/OpCap9.84%9.84%9.84%9.84%9.84%9.84%Note:
Numbers in the figure are shown as rounded for clarity in
reporting. However unrounded values are used for all
calculations. The next step is to estimate the horizon value and
the value of operations, beginning with the horizon value.Free
cash flow at beginning of the constant growth phase (FCF2021)
=$216.892Weighted average cost of capital (WACC)
=10.97%Constant growth rate (gL) =5%HV2021 = Vop, 2021
=[FCF2021 (1+gL)]/ [WACC-gL]HV2021 = Vop, 2021
=$3,814.678MicroDrive's time line of expected free cash flows
and horizon value is shown
below.Year201620172018201920202021FCF$25.000$88.000$12
7.710$206.564$216.892Horizon value$3,814.678Present value
of HV = $2,266.887Present value of free cash flows =
$452.552Total value of operations at Year 0, Vop, at t=0
=$2,719.439The figure below shows a summary of these
calculations.Figure 7-7MicroDrive Inc.'s Value of Operations
(Millions of Dollars)INPUTS:Scenario:Status QuogL =
5%WACC
=10.97%ProjectionsYear201620172018201920202021FCF$25.0
00$88.000$127.710$206.564$216.892⟶
7. ↴ ↓↓↓↓↓↓FCF2017FCF2018FCF2019FCF2020FCF2021↓─────
─────────────────────────HV =
Vop(2021)(1+WACC)1(1+WACC)2(1+WACC)3(1+WACC)4(1+
WACC)5↓↓↓↓↓↓ FCF2021(1+gL)↓↓↓↓↓ ───────── ↓↓↓↓↓
(WACC− gL)↓↓↓↓↓↓PVs of
FCFs$22.529⟵
⤶ ↓↓↓↓$227.736$71.461⟵
⟵
⟵
⟵
⟵
⤶ ↓↓↓0.0597$93.
456⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⤶ ↓↓↓$136.217⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⤶ ↓$3,
814.678$128.889⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⤶ ↓PV of
HV$2,266.887⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
$3,814.678 ⟵
⟵
⤶ ↓=
────── Vop =$2,719.44(1+WACC)5Note: Numbers in the
figure are shown as rounded for clarity in reporting. However
unrounded values are used for all calculations. Estimating
MicroDrive's Intrinsic Stock Price per ShareValue of operations
=$2,719.44Weighted average cost of capital (WACC)
=10.97%Short-term investments =$0Short-term debt (notes
payable) =$280Long-term debt (bonds) =$1,200Preferred stock
=$100Number of shares of common stock =50MicroDrive's total
value is the sum of value of operations and the short-term
investments: Value of operations$2,719.44+ ST
investments$0Estimated total intrinsic value$2,719.44The next
step is to estimate the intrinsic value of equity, which is the
remaining total value after accounting for the claims of
debtholders and preferred stockholders: Value of
operations$2,719+ ST investments$0Estimated total intrinsic
value$2,719.44− All debt$1,480− Preferred stock$100Estimated
intrinsic value of equity$1,139.44The final step is to estimate
the intrinsic common stock price per share, which is the
estimated intrinsic value of equity divided by the number of
shares of common stock: Value of operations$2,719.44+ ST
investments$0Estimated total intrinsic value$2,719.44− All
debt$1,480− Preferred stock$100Estimated intrinsic value of
equity$1,139.44÷ Number of shares50Estimated intrinsic stock
price =$22.79The figure below shows a summary of the
previous calculations.Figure 7-8MicroDrive Inc.'s Intrinsic
Stock Price (Millions, Except for Per Share Data)INPUTS:gL =
5%WACC =10.97%Year =20172018201920202021Projected
8. FCF =$25$88.0$127.71$206.564$216.892Horizon Value:Value
of operations$2,719+ ST investments$0=$3,815Estimated total
intrinsic value$2,719− All debt$1,480Value of Operations:−
Preferred stock$100Present value of HV$2,266.89Estimated
intrinsic value of equity$1,139+ Present value of FCF$452.55÷
Number of shares50Value of operations =$2,719.44Estimated
intrinsic stock price =$22.79Note: Numbers in the figure are
shown as rounded for clarity in reporting. However unrounded
values are used for all calculations. 7-8 Do Stock Prices Reflect
Long-Term or Short-Term Cash Flows?Managers often claim
that stock prices are "short-term" in nature in the sense that they
reflect what is happening in the near-term and ignore the long-
term. We can use MicroDrive's results to shed light on this
claim.We previously estimated MicroDrive's current value of
operations. We also estimated MicroDrive's horizon value at
Year 5 and calculated its present value. If we divide the present
value of the horizon value, we can estimate how much of
MicrDrive's value is due to cash flows occurring beyond Year 5.
In other words, we can determine how much of MicroDrive's
value is due to long-term cash flows and how much is due to
short-term cash flows.Inputs:Weighted average cost of capital
=10.97%Horizon year =5Horizon value at Year 5 (HV5)
=$3,814.678Value of operations at Year 0 (Vop,0)
=$2,719.439Analysis:Present value of the horizon value
=$2,266.887Value of operations at Year 0
=$2,719.439Results:Percent of current value due to long-term
cash flows (i.e., PV of HV5) =83%Percent of current value due
to short-term cash flows =17%For most stocks, the percentage
of the current price that is due to long-term cash flows is over
80%.7-9 Using the Free Cash Flow Valuation Model to Identify
Value DriversWe can use the free cash flow valuation model we
developed previously for MicroDrive to determine how the
inputs (sales growth, operating profitability, and capital
requirements) affect the value of operations and intrinsic stock
price. It is very easy to do this in Excel by using the Scenario
Manager feature. Following is an explantion of how to use this
9. feature.The Scenario Manager allows you to specify values for
particular cells and then save those values as a "scenario." If
you later change the values in the cells, perhaps to see the
impact that the change has on an output, the Scenario Manager
allows you to restore the saved scenario without having to re-
input the original values. You can create numerous different
scenarios, and you can even have the Scenario Manager create a
summary that shows the values of the input cells and the values
of the output cells for each scenario that you created.To create a
scenario, go to the Data tab in the menu, look in the Data Tools
section for What-If Analysis, and then select Scenario Manager.
This will open a dialog box that shows seven existing scenarios.
If you select the button for "Add…", you will get another dialog
box asking you to give the scenario a name and to specify the
"Changing cells." The "Changing cells" are the cells with values
that you want the Scenario Manager to save. For example, we
want to save the values for MicroDrive's estimated sales growth
rates, operating profitabiltiy ratio, and capital requirement ratio.
After specifying the "Changing cells", click "Ok" and you will
get a new dialog box asking you to input the values into the
changing cells that you want for this scenario. There will
already be values shown, which are the values currently in those
cells. So if you have already put the values into the cells in the
Excel workbook, you won't have to re-enter them in the dialog
box, you can simply click "Ok" and you will have created a new
scenario.The original dialog box gives you several options,
including adding a scenario, deleting a scenario, and editing a
scenario. It also give you the option to run a "Summary." If you
select the "Summary" button, you get a dialog box asking you to
specify some "Results" cells. For example, we specified the
cells in this worksheet that have the value of operations, the
intrinsic stock price, and the return on invested capital for the
last year in the forecast horizon. After selecting the "Results"
cells, you can click "Ok" and the Scenario Manager will create a
new worksheet named "Scenario Summary". This new sheet
contains the name of each scenario, the values in the "Changing
10. cells", and the values in the "Results cells. We copied the
information from the "Scenario Summary" into the table below
and then formatted the table to make it a bit more reader-
friendy. Figure 7-9Value Drivers for MicroDrive Inc. (Millions,
Except for Per Share Data)ScenarioAdditional information not
in textbook(1)
Status Quo(2)
Higher Sales Growth (Only)(3)
Higher Operating Profitability (Only)(4)
Better Capital Utilization (Only)(5)
Improve Growth and OP(6)
Improve Growth and CR(7)
Improve Growth, OP, and CR(8)
Status Quo but Lower WACC(9)
Better OP and CRInputsSales growth in 1st
year10%11%10%10%11%11%11%10%10%Sales growth in 2nd
year8%9%8%8%9%9%9%8%8%Sales growth in 3rd
year7%8%7%7%8%8%8%7%7%Long-term sales growth
(gL)5%6%5%5%6%6%6%5%5%Operating profitability
(OP)6%6%7%6%7%6%7%6%7%Capital requirement
(CR)61%61%61%52%61%52%52%61%52%Weighted average
cost
of capital
(WACC)10.97%10.97%10.97%10.97%10.97%10.97%10.97%9.5
0%10.97%ResultsValue of
operations$2,719$2,713$3,682$3,576$3,880$3,751$4,918$3,690
$4,538Intrinsic stock
price$22.79$22.67$42.04$39.91$46.00$43.42$66.76$42.19$59.
16Return on invested
capital
(ROIC)9.84%9.84%11.48%11.54%11.48%11.54%13.46%9.84%
13.46%To better understand why growth doesn't always add
value, we can express the horizon value as:If the numerator in
the fraction in brackes, (1+gL) ROIC − WACC, is negative,
then the value of operations will be less than the total net
operation capital, OpCapT. If ROIC < WACC/(1+WACC), then
11. growth hurts value. The 2-way data table below show the
difference between the value operations and the amount of
operating capital for different combinations of growth and
ROIC. For input values, we use values similar to those of
MicroDrive's at the horizon.Input Values (Base Case)OpCap
=$4,274gL =5.0%ROIC =9.84%WACC =10.97%Output from
equation above in yellow.Vop =$3,815Vop − OpCap =-$460A
Two-Way Data Table Showing How Combinations of Growth
and ROIC Affect the Value of Operations Minus the Value of
Operating CapitalCombinations of growth and ROIC that have
Vop < OpCap are shown in pink. Notice that for very low values
of ROIC, such as the first row with ROIC = 9.7%, growth
reduces value (you can see this by looking across the row. For
very high values of ROIC, such as the last row with ROIC =
11%, growth adds value. For other combinations, it depends on
the relative values of growth, ROIC, and
WACC.gL−$4600.0%2.5%5.0%7.5%9.5%ROIC9.70%-$495-
$519-$562-$668-$1,0139.80%-$456-$467-$487-$536-
$6959.84%-$442-$448-$460-$488-$5809.90%-$417-$415-$412-
$403-$37710.00%-$378-$363-$337-$271-$5810.10%-$339-
$312-$261-$139$26010.20%-$300-$260-$186-$6$57910.30%-
$261-$208-$111$126$89710.40%-$222-$156-
$36$259$1,21510.50%-$183-$105$39$391$1,53410.60%-$144-
$53$115$524$1,85210.70%-$105-$1$190$656$2,17110.80%-
$66$50$265$788$2,48910.90%-
$27$102$340$921$2,80711.00%$12$154$415$1,053$3,1267-11
Valuing Common Stocks with the Dividend Growth ModelThe
Discounted Dividend ApproachThe value of any financial asset
is the present value of the future cash flows provided by the
asset. When an investor buys a share of stock, he or she
typically expects to receive cash in the form of dividends and
then, eventually, to sell the stock and to receive cash from the
sale. However, the price the first investor receives is dependent
upon the dividends the next investor expects to earn, and so on
for different generations of investors. Thus, the stock's value
ultimately depends on the cash dividends the company is
12. expected to provide and the discount rate used to find the
present value of those dividends.Here is the basic dividend
valuation equation:P0 =D1+D2+. . . .DN( 1 + rs )( 1 + rs ) 2(
1 + rs ) NThe dividend stream theoretically extends on out
forever, i.e., to N = infinity. Obviously, it would not be
feasible to deal with an infinite stream of dividends, but
fortunately, a relatively simple equation has been developed
that can be used to find the PV of the dividend stream, provided
it is growing at a constant rate.Valuing a Constant Growth
StockIn the constant growth model, we assume that the dividend
and stock will grow forever at a constant growth rate. Naturally,
assuming a constant growth rate for the rest of eternity is a
rather bold assumption. However, considering the implications
of imperfect information, information asymmetry, and general
uncertainty, the assumption of constant growth is often
reasonable. It is reasonable to guess that a given stock will
experience ups and downs throughout its life. By assuming
constant growth, we are trying to find the average of the good
times and the bad times, and we assume that we will see both
scenarios over the firm's life. In addition to a constant growth
rate, we also need the estimated long-term required return for
the stock, and it too must be constant. If these variables are
constant, our price equation for common stock simplifies to the
following expression:P0 =D1( rs – gL )Generally speaking, the
long-run growth rate of a firm is likely to fall between 5% and
8% a year.Example: Value of a Constant Growth StockA firm
just paid a $1.15 dividend and its dividend is expected to grow
at a constant rate of 8%. What is its stock price, assuming it
has a required return of 13.4%?D0 =$1.15gL =8%rs =13.4%P0
=D1=D0 (1 + gL)=$1.2420( rs – gL )( rs – gL )0.0540P0
=$23.00Expected Rate of Return on a Constant Growth
StockUsing the constant growth equation introduced earlier, we
can re-work the equation to solve for rs. In doing so, we are
now solving for an expected return. The expression we are left
is:D1+gLP0This expression tells us that the expected return on
a stock comprises two components. First, it consists of the
13. expected dividend yield, which is simply the next expected
dividend divided by the current price. The second component
of the expected return is the expected capital gains yield. The
expected capital gains yield is the expected annual price
appreciation of the stock, and is given by gL. This shows us the
dual role of gL in the constant growth rate model. Not only
does g indicate expected dividend growth, but it is also the
expected stock price growth rate.Example: Expected Rate of
Return on a Constant Growth StockYou buy a stock for $23, and
you expect the next annual dividend to be $1.242. Furthermore,
you expect the dividend to grow at a constant rate of 8%. What
is the expected rate of return on the stock, and what is the
dividend yield of the stock?Inputs:P0
$23.00D1$1.242gL8%13.40%Dividend yield =5.40%What is the
expected price of this stock in 1 year?Application of Constant
Growth Model at t=1P1 =D2( rs – gL )D2 =1.34136P1
=$24.84Valuing Nonconstant Growth StocksFor many
companies, it is unreasonable to assume that they grow at a
constant growth rate. Hence, valuation for these companies
proves a little more complicated. The valuation process, in this
case, requires us to estimate the short-run nonconstant growth
rate and predict future dividends. Then, we must estimate a
constant long-term growth rate at which the firm is expected to
grow. Generally, we assume that after a certain point of time,
all firms begin to grow at a rather constant rate. Of course, the
difficulty in this framework is estimating the short-term growth
rate, how long the short-term growth will hold, and the long-
term growth rate.Figure 7-10Illustrative Dividend Growth at
Different RatesData for figure:Growth RatesYearDeclining
ZeroConstantNonconstant1-8%0%8%30%2-8%0%8%20%3-
8%0%8%10%4-8%0%8%8%5-
8%0%8%8%DividendYearDeclining Growth: -8%Zero
GrowthConstant Growth: 8%Long-Term Growth:
8%YearDeclining Growth: -8%Zero GrowthConstant Growth:
8%Long-Term Growth:
8%0$1.15$1.15$1.15$1.1501.15001.15001.15001.15001$1.06$1
14. .15$1.24$1.5011.05801.15001.24201.49502$0.97$1.15$1.34$1.
7920.97341.15001.34141.79403$0.90$1.15$1.45$1.9730.89551.
15001.44871.97344$0.82$1.15$1.56$2.1340.82391.15001.56462
.13135$0.76$1.15$1.69$2.3050.75791.15001.68972.3018Specifi
cally, we will predict as many future dividends as we can and
discount them back to the present. Then we will treat all
dividends to be received after the convention of constant growth
rate with the Gordon constant growth model described above.
The point in time when the dividend begins to grow constantly
is called the horizon date. When we calculate the constant
growth dividends, we solve for the horizon value (also called a
terminal value or a continuing value) as of the horizon date.
The horizon value can be summarized as:HVT =PT
=DT+1=DT (1 + g)( rs – gL )( rs – gL )This condition holds
true, where T is the horizon date. The horizon value can be
described as the expected value of the stock at the time period
corresponding to the horizon date.A company's stock just paid a
$1.15 dividend, which is expected to grow at 30% the first year,
20% the second year, and 10% the third year. After three years
the dividend is expected to grow constantly at 8% forever. The
stock's required return is 13.4%; what is the price of the stock
today?Figure 7-11Process for Finding the Value of a
Nonconstant Growth StockINPUTS:D0 =$1.15Last dividend the
company paid.rs =13.4%Stockholders' required return.g0,1
=30%Growth rate for Year 1 only.g1,2 =20%Growth rate for
Year 2 only.g2,3 =10%Growth rate for Year 3 only.gL
=8%Constant long-run growth rate for all years after Year
3.ProjectionsYear0123⟶∞Growth
rate30%20%10%8%DividendD0D0(1+g0,1)D1(1+g1,2)D2(1+g1,
2)Dt$1.15$1.495$1.794$1.973↓↓↓D1D2D3─────────────
─────HV3 = (1+rs)1(1+rs)2(1+rs)3↓↓↓↓ D3(1+gL)↓↓↓
─────── ↓↓↓(rs− gL)↓↓↓↓↓↓↓$2.131PVs of
Dividends$1.318⟵
⤶ ↓↓5.400%$1.395⟵
⟵
⟵
⟵
⟵
⤶ ↓↓$1.353⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
⤶ $39.468↓PV of $27.065⟵
⟵
⟵
⟵
⟵
⟵
⟵
⟵
$39.468↓=
──────⟵
⟵
⟵
⟵
= ────── Vop
=$31.13(1+0.134)3(1+rs)3Note: Numbers in the figure are
16. Short-term investments = Value of operations = 2 100
Claims on Value
Debt = Preferred stock = Estimated equity value = Total =
28 4 70
Scenario SummaryScenario SummaryCurrent Values:Status
QuoHigher Growth (Only)Higher OP (Only)Better CR
(Only)Improve Growth and OPImprove Growth and CRImprove
Growth, OP, and CRLower WACC (Only)Better OP and
CRCreated by Mike Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/22/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 5/23/2014
Modified by Mike Ehrhardt on 5/23/2014Created by Mike
Ehrhardt on 3/21/2015Changing Cells:$A$324Status QuoStatus
QuoHigher Growth (Only)Higher OP (Only)Better CR
(Only)Improve Growth and OPImprove Growth and CRImprove
Growth, OP, and CRLower WACC (Only)Better OP and
CR$F$3278%8%9%8%8%9%9%9%8%8%$G$3277%7%8%7%7
%8%8%8%7%7%$H$3275%5%6%5%5%6%6%6%5%5%$E$327
10%10%11%10%10%11%11%11%10%10%$E$3286%6%6%7%
6%7%6%7%6%7%$E$32961%61%61%61%52%61%52%52%61
%52%$C$28210.97%10.97%10.97%10.97%10.97%10.97%10.97
%10.97%9.50%10.97%Result
17. Cells:$B$396$2,719.44$2,719.44$2,713.27$3,681.78$3,575.63$
3,879.93$3,751.25$4,917.91$3,689.71$4,537.97$G$460$22.79$
22.79$22.67$42.04$39.91$46.00$43.42$66.76$42.19$59.16$I$3
389.84%9.84%9.84%11.48%11.54%11.48%11.54%13.46%9.84
%13.46%Notes: Current Values column represents values of
changing cells attime Scenario Summary Report was created.
Changing cells for eachscenario are highlighted in gray.
7-4SECTION 7-4SOLUTIONS TO SELF-TEST A company
expects a constant FCF of $240 million per year forever. If the
WACC is 12%, what is the value of operations?Expected
FCF$240WACC12%Vop = $2,000.00A company has a current
value of operations of $800 million. The company has $100
million in short-term investments. If the company has $400
million in debt and has 10 million shares outstanding, what is
the price per share?Vop$800ST investments$100Total
value$900Debt$400Value of equity$500Number of
shares10Price per share$50.00
7-5SECTION 7-5SOLUTIONS TO SELF-TEST A company
expects to have a FCF in 1 year of $300, which is expected to
grow at a constant rate of 3% forever. If the WACC is 11%,
what is the value of operations?Expected FCF1 =$330Expected
gL =3%WACC =11%Vop = $4,125A company's most recent free
cash flow was $270. The company expects to have a FCF in 1
year of $300, which is expected to grow at a constant rate of 3%
forever. If the WACC is 11%, what is the value of
operations?Expected FCF1 =$300Expected gL =3%WACC
=11%Notice that the FCF of $270 at t = 0 is irrelevant to the
value of operations, because it occurred in the past. The value
of operations depends only on the future free cash flows.Vop =
$3,750A company's most recent free cash flow was $600 and is
expected to grow at a constant rate of 4% forever. If the WACC
is 10%, what is the value of operations?FCF0 =$600Expected
gL =4%WACC =10%Vop = $10,400
7-6SECTION 7-6SOLUTIONS TO SELF-TEST A company
expects to have a FCF at Year 10 of $600, which is expected to
grow at a constant rate of 8% thereafter. If the WACC is 8%,
18. what is the value of operations at Year 10, HV10?Expected
FCF12 =$600Expected gL =4%WACC =8%Vop = $15,600A
company expects a FCF of -$10 million at Year 1 and a FCF of
$20 million at Year 2. FCF is expected to grow at a 5% rate
after Year 2. If the WACC is 10%, what is the horizon value of
operations; i.e., Vop(Year 2)? What is the current value of
operations; i.e., Vop(Year 0)?Long-term growth
rate5%WACC10%Year12FCF1FCF2Expected FCF-
$10.00$20.00Vop(Year 2)$420.00PV of expected FCF$7.44PV
of expected Vop(Year 2)$347.11Vop(Year 0)$354.55
7-7SECTION 7-7SOLUTIONS TO SELF-TEST Cathey
Corporation currently has sales of $1,000, which are expected to
grow by 10% from Year 0 to Year 1 and by 4% from Year 1 to
Year 2. The company currently has and operating profitability
(OP) ratio of 7% and a capital requirement (CR) ratio of 50%
and expects to maintain these ratios at their current levels. The
current level of operating capital is $510. Use these inputs to
forecast free cash flow (FCF) for Years 1 and 2. Hint: You must
first forecast sales, net operating profit after taxes (NOPAT),
and total net operating capital (OpCap) for each year.Sales0
=$1,000g0,1 =10%g1,2 =4%OP = NOPAT/Sales =7%CR =
OpCap/Sales =50%OpCap0 =$510Year0123Growth rate in
sales10%4%4%Sales$1,000$1,100.00$1,144.00$1,189.76NOPA
T$77.00$80.08$83.28OpCap$510$550.00$572.00$594.88Invest
ment in
OpCap$40.00$22.00$22.88FCF$37.00$58.08$60.40Growth in
FCF57.0%4.0%Cathey Corporation has a 12% weighted average
cost of capital. Cathey's free cash flows, estimated in the
previous question, are expected to grow at 4% beginning at
Year 2 and continuing for the foreseeable future. What is the
horizon value (use Year 2 for the horizon)? What is the current
value of operations? Long-term growth
rate4%WACC12%Year12FCF1FCF2Expected
FCF$37.00$58.08HV2 = Vop(Year 2)$755.04PV of expected
FCF$79.34PV of expected HV(Year 2)$601.91Vop(Year
0)$681.25Cathey Corporation has $80 in short-term
19. investments, $20 in short-term debt, $140 in long-term debt,
$30 in preferred stock, and 10 shares of common stock
outstanding. Use the value of operations from the previous
question to estimate the intrinsic common stock price per
share.Vop =$681.25ST investments =$80.00ST debt
=$20.00Long-term debt =$140.00Preferred stock
=$30.00Number of shares =10Vop$681.25ST
investments$80.00Total value$761.25All debt$160.00Preferred
stock$30.00Value of equity$571.25Number of shares10.00Price
per share$57.13
7-11SECTION 7-11SOLUTIONS TO SELF-TESTIf D1 = $3.00,
P0 = $50, and the expected P at t=1 is equal to $52, what are the
stock’s expected dividend yield, capital gains yield, and total
return for the coming year?D1$3.00P0$50.00Expected
P1$52.00Exp. dividend yield6.0%=B6/B7Exp. capital gains
yield4.0%=(B8-B7)/B7Exp. total return10.0%=C10+C11A stock
is expected to pay a dividend of $2 at the end of the year. The
required rate of return is rs = 12%. What would the stock’s
price be if the growth rate were 4%? D1$2.00gL4%rs12%Stock
price$25.00A stock is expected to pay a dividend of $2 at the
end of the year. The required rate of return is rs = 12%. What
would the stock’s price be if the growth rate were
0%?D1$2.00gL0%rs12%Stock price$16.67If D0 = $4.00, rs =
9%, and g = 5% for a constant growth stock, what are the
stock’s expected dividend yield and capital gains yield for the
coming year?D0$4.00gL5%rs9%Expected D1$4.20Stock
price$105.00Expected dividend yield4.00%Expected capital
gains yield5.00%Alternatively, you know that the capital gains
yield is equal to the growth rate.Expected capital gains yield =
growth rate = 5.00%Because the total return is rs, the dividend
yield is rs minus the capital gains yield:Expected dividend yield
=4.00%Suppose D0 = $5.00 and rs = 10%. The expected growth
rate from Year 0 to Year 1 (g0 to 1) = 20%, the expected growth
rate from Year 1 to Year 2 (g1 to 2) = 10%, and the constant
rate beyond Year 2 is gL = 5%. What are the expected
dividends for Year 1 and Year 2? What is the expected horizon
20. value price at Year 2? What is the expected price at Time
0?D0$5.00g0 to 120%g1 to
210%gL5%rs10%Year12D1D2Expected
dividends$6.00$6.60Expected HVP,2$138.60PV of expected
dividends$10.91PV of expected HVP,2$114.55Expected price at
Time 0$125.45
7-12SECTION 7-12SOLUTIONS TO SELF-TESTDodd
Corporation is a private company that earned $4.00 per share
for the most recent year. If the average P/E ratio of a group of
comparable public companies is 11, what is an estimate of
Dodd's stock value on a per share basis? Earnings per share
=$4.00Average comparable P/E ratio =11.0Estimated price per
share =$44.00The company in the previous question, Dodd
Corporation, has 100,000 shares of common stock owned by its
founder. Dodd owes $1,300,000 to its bank. Dodd has 11,400
customers. If the average ratio of total entity value to customers
is $500 for a group of comparable public companies, what is
Dodd's estimated total entity value? What is its estimated stock
value on a per share basis?Number of shares =100,000Debt
=$1,300,000Number of customers =11,400Average comparable
ratio of
total entity value to number of customers =$500Estimated
entity value =$5,700,000− Debt$1,300,000Intrinsic equity
value4,400,000÷ Number of shares100,000Estimated price per
share =$44.00
7-14SECTION 7-14SOLUTIONS TO SELF-TEST A preferred
stock has an annual dividend of $5. The required return is 8%.
What is the Vps?Dps$5.00rps8%Vps$62.50
(
)
ú
û
ù
ê
ë
é
![=$4− Preferred stock$4Number of shares of common stock
=5Estimated intrinsic value of equity$70÷ Number of
shares5Estimated intrinsic stock price$14.00Data for Pie
ChartsShort-term investments =$2Value of operations
=$100Total =$102Debt =$28Preferred stock =$4Estimated
equity value =$70Total =$1027-5 The Constant Growth Model:
Valuation when Expected Free Cash Flow Grows at a Constant
RateCase 1: The expected free cash flow at t=1 and the expected
constant growth rate after t=1 are known.First expected free
cash flow (FCF1) =$105Weighted average cost of capital
(WACC) =9%Constant growth rate (gL) =5%When free cash
flows are expected to grow at a constant rate, the value of
operations is:Value of operations (Vop) =FCF1 / [WACC-
gL]Value of operations (Vop) =$2,625Case 2: Constant growth
is expected to begin immediately.Most recent free cash flow
(FCF0) =$200Weighted average cost of capital (WACC)
=12%Constant growth rate (gL) =7%When free cash flows are
expected to grow at a constant rate, the value of operations
is:Value of operations (Vop) =[FCF0(1+gL)]/[WACC-gL]Value
of operations (Vop) =$4,2807-6 The Multi-Stage Model:
Valuation when Expected Short-Term Free Cash Flow Grows at
a Nonconstant RateThurman Corporation's expected free cash
flows are shown below.Year01234FCF−$20$80$100$110Growth
in FCF25%10%Free cash flows are expected to grow at a 5%
rate starting at Year 4 and to continue growing at a 5% rate for
the foreseeable future. We know the free cash flow at Year 4
and we know that FCF grows at a constant rate after Year 4.
Therefore, we set the horizon date at Year 4.Free cash flow at
beginning of the constant growth phase (FCF4) =$110Weighted
average cost of capital (WACC) =15%Constant growth rate (gL)
=5%HV4 = Vop, at 4 =[FCF4 (1+gL)]/ [WACC-gL]HV4 = Vop,
at 4 =$1,155Thurman's time line of expected free cash flows
and horizon value is shown
below.Year01234FCF−$20$80$100$110Horizon
value$1,155Present value of HV4 = $660.375Present value of
free cash flows = $171.745Total value of operations at Year 0,](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)