Estimation of the cost of equity capital for Rolls-Royce plc using the Capital Asset Pricing Model (CAPM), the Market Derived Pricing Model (MCPM) and the Dividend Valuation Model (DVM). Comment on the potential sources of error in the estimate and reasons why the three models give different results.

Analysis of the financial accounts as at year end 31 December 2013 noting the five most important financial issues faced by the company and how they are being resolved by the company

Forecast of the revenues for the next five years for Rolls Royce using the most up to date information available relevant to the company.

Forecast of the earnings per share and dividend per share for Rolls Royce assuming dividends grow at 8% per annum and using the equity cost of capital from chapter 1. Estimation of the equity share value of the company.

Estimation of the value of an ‘at the money’ call option for Rolls Royce using the Black & Scholes Option Pricing Model.

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Content

List of Figures and Tables

1 Cost of Equity Capital

2 Financial Issues

3 Revenue Forecast

4 Forecast of Earnings and Dividend per Share

5 Call Option Estimation

References

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Title: Rolls-Royce plc. A Company’s Valuation on the Basis of 2013’s and Historic Financial Reports and Figures
College: Nordakademie University
Course: Business Valuation and Analysis
Grade: 1,7
Author: Jakob Müller (Author)
Publication Year: 2014
Pages: 14
Catalog Number: V294930
ISBN (eBook): 9783656958130
ISBN (Book): 9783656958147
Language: English
Tags: Rolls-Royce plc Capital Asset Pricing Model CAPM Market Derived Pricing Model MCPM Dividend Valuation Model DVM Revenue Forecast Black & Scholes Option Pricing Model equity share value

Rolls-Royce plc. A Company’s Valuation on the Basis of 2013’s and Historic Financial Reports and Figures

Excerpt

Content

Details