--%>
Assignment Help - homework help

An example of use beta of Kinepolis in this valuation

A financial consultant is valuing the company I set as an objective (an entertainment centre) by discounting the cash flows until the end of the dealership at 7.26% (interest rate on 30-year-bonds = 5.1%; market premium = 5%, and Beta = 0.47%). 0.47 is a beta provided by Bloomberg for Kinepolis (the company whose activity is the management of several cinemas in the EU), in function of the Dax Index. Is it correct to use the beta of Kinepolis in this valuation?

E

Expert

Verified

No, it is obviously not correct to use the beta of Kinepolis in this valuation. The required return to shares (7.26 percent) is a ridiculous number for an entertainment center. In the use of calculated betas.

   Related Questions in Corporate Finance

  • Q : Illustrates reserves are real money or

    The part of the net income which is not distributed to shareholders goes to reserves (to shareholders’ equity). As dividends shows real money, reserves are real money as well. Is it true?

    		•
  • Q : Is ROE a correct measurement of return

    The ROE is the ratio among net income and Shareholders’ equity. The meaning of Return on Equity is return to shareholders. Therefore, is ROE a correct measurement of the return to shareholders?

    		•
  • Q : Types of lease contracts What are the

    What are the types of lease contracts which are seen in practice?

    		•
  • Q : Does the book value of the debt

    Does the book value of the debt all the time coincide with its market value?

    		•
  • Q : How can auditor spot acts of creative

    How can auditor spot acts of creative accounting? Means let an illustration, the excess of provisions or the non-elimination of intra group transactions along with value added.

    		•
  • Q : Markets are expected to be Volatile

    When Markets are expected to be Volatile: For the bear and bull strategy to yield gains, it is essential that the trader takes a view on the direction of the market i.e. either bearish or bullish, and accordingly implement the strategic choice. More o

    		•
  • Q : Explain reasonable things to do is to

    The reasonable thing to perform is to finance current assets that are collections and inventories etc. with short-term debt and fixed assets along with long-term debt. Is it correct?

    		•
  • Q : Data Case Please Assist with the

    Please Assist with the attached Data Case Assignment

    		•
  • Q : Who was the first to quantify the idea

    Who was the first to quantify the idea of Brownian motion?

    		•
  • Q : Problem on optimal capital structure

    XYZ Company has debt/assets ratio 50%, that is too high and it must be at 45% to be optimal. This debt reduction must also reduce the bankruptcy costs by $30 million. At present, XYZ has 5 million shares of common stock selling at $50 each. The tax rate of XYZ is 30%.

    		•