Matrix A

5 34
4 20
2 9
3 191
1 21

T
Matrix A
22 8
56 6
43 1

MAT
Matrix A
1 2
3 2
2 4
 Matrix A
1 2
3 2
2 4

Inverse of A
3.5 0.5
2.75 -0.25
-2 0

Matrix A of Coefficients

3 4
0 -33
42 3

Data Set For Regression Analysis

Sales(Y) Airplay Play Per Week(X1)
330 43
120 28
360 35
270 33
220 44
170 19
70 20
 210 22
200 21
300 40
290 32
70 20
150 24
190 38
240 24
100 25
250 35

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.8605785258
R Square 0.740595399
Adjusted R Square 0.6807327988
Standard Error 49.4704351152
Observations 17

ANOVA
df
Regression 3
Residual 13
Total 16

Coefficients
Intercept -93.9065243878
Airplay Play Per Week(X1) 4.9534873101
Attractivenss Scale(X2) 19.3190670585
Advertising Dollars(X3) 0.0552867124

Input
Cost of house $200,000
Down Payment $20,000
Interest Rate 4.00%
Repayment years 15
Payments per year 12

Outputs
Amount borrowed $180,000
Monthly rate 0.0033333333

#Payment Periods 180

Monthly payment $1,331.44
Total to repay loan $239,658.89
Total interest paid $59,658.89
 Addition of Matrices
Matrix B
0.125 2
43 4
34 -33.4
26 45
1.99 3.6

TRANSPOSITION OF MATRICES
Matrix A Transpose of A
98 45 22
0 15 8
55 20 98
45

MATRIX MULTIPLICATION
xA Matrix B
4 2
8 2
9 1

AB
10 23 51
 18 37 93
21 48 110

Matrix Inverse
Matrix B
4 2
8 2
9 1

of A Inverse of B
-2 1.10
-1 -0.29
1 -0.06

oefficients Column Vector Y

66 16
1 77
2 12

Set For Regression Analysis

Attractivenss Scale(X2) Advertising Dollars(X3)
10 10.26
7 985.69
7 1445.56
7 1188.19
5 574.51
5 568.95
1 471.81
 9 537.35
7 514.07
7 174.09
7 1720.81
2 611.48
8 251.19
6 97.97
7 406.81
5 265.4
5 1323.29

SS MS F Significance F
90831.8474672017 30277.2824890672 12.3715875387 0.0004151729
31815.2113563277 2447.3239504868
122647.058823529

Standard Error t Stat P-value Lower 95%

51.543394787 -1.8218925 0.0915506384 -205.259258716
1.5573774708 3.1806594118 0.0072319133 1.5889778425
5.9054083989 3.2714193081 0.0060726673 6.5612078747
0.0247631283 2.232622294 0.0437888869 0.0017892262

Data Table With One Input

Years $1,331.44 $239,658.89

5
10
15
20
25
 30
35
40

Data Table With Two Input

Interest Rate
$59,658.89 1% 2%
5
10
15
20
25
30
35
40
 Sum of A+B
5.125 36
47 24
36 -24.4
29 236
2.99 24.6

Transpose of A
56 43
6 1
0 55
15 20

Matrix B
3 5
6 7
2 8
 3 5
6 7
2 8

Inverse of B
-0.45 -0.29
0.35 -0.13
-0.03 0.19

Solution A-1Y

0.4342880891 0.434288089
-2.32232029
0.363430559
 Upper 95% Lower 95.0% Upper 95.0%
17.4462099406 -205.259259 17.4462099406
8.3179967777 1.588977843 8.3179967777
32.0769262423 6.561207875 32.0769262423
0.1087841986 0.001789226 0.1087841986

Input
$59,658.89

18898.43819687
38689.49843614
59658.8878974
81783.50225734
105031.8937608
 129365.1114616
154737.7042212
181098.8375649

With Two Input

Interest Rate
3% 4% 5%
proportion of Portfolio X 0.30
Mean return, E(rp) 11.13%
Variance of return, p 2
14.06%
Stand. dev. of return, p 37.50%

Table of returns
Proportion of X Stand. Dev
37.50%
-0.80
-0.65
-0.50
-0.35
-0.20
-0.05
0.10
0.25
0.40
0.55
0.70
0.85
1.00
1.15
1.30
1.45
1.60
1.75
1.90

Price and return da

Prices
Date Samsung
1-Jun-16 26.07
2-Jun-16 22
3-Jun-16 20.07
4-Jun-16 20.02
5-Jun-16 23.35
6-Jun-16 24.79
7-Jun-16 23.03
 8-Jun-16 18.09
9-Jun-16 19.17
10-Jun-16 20.25
11-Jun-16 22.79
12-Jun-16 20.52
13-Jun-16 50.93
14-Jun-16 52.19
15-Jun-16 55.31
16-Jun-16 55.63
17-Jun-16 58.46
18-Jun-16 60.23
19-Jun-16 65.46
20-Jun-16 60.84
21-Jun-16 67.51
22-Jun-16 67.65
23-Jun-16 65.27
24-Jun-16 66.13
25-Jun-16 64.87
26-Jun-16 69.25
27-Jun-16 72.16
28-Jun-16 71.16
29-Jun-16 73.76
30-Jun-16 74.2

Monthly mean 3.61%

Monthly variance 0.0341
Monthly standard deviation 18.46%
Annual mean 43.28%
Annual variance 40.88%
Annual standard deviation 63.94%

proportion of SAMSUNG 0.5

Proportion of SYMPHONY 0.5

SAMSUNG
2-Jun-16 -16.97%
3-Jun-16 -9.18%
4-Jun-16 -0.25%
5-Jun-16 15.39%
6-Jun-16 5.98%
7-Jun-16 -7.36%
 8-Jun-16 -24.14%
9-Jun-16 5.80%
10-Jun-16 5.48%
11-Jun-16 11.82%
12-Jun-16 -10.49%
13-Jun-16 90.91%
14-Jun-16 2.44%
15-Jun-16 5.81%
16-Jun-16 0.58%
17-Jun-16 4.96%
18-Jun-16 2.98%
19-Jun-16 8.33%
20-Jun-16 -7.32%
21-Jun-16 10.40%
22-Jun-16 0.21%
23-Jun-16 -3.58%
24-Jun-16 1.31%
25-Jun-16 -1.92%
26-Jun-16 6.53%
27-Jun-16 4.12%
28-Jun-16 -1.40%
29-Jun-16 3.59%
30-Jun-16 0.59%

CALC
Variance-covariance matrix
0.4 0.03
0.03 0.2
0.02 0
0 -0.06

Constant 0.04

Computing an envelope portfolio with constant = 0

z
0.1017
0.5657
0.1141
1.1052
sum

Computing an envelope portfolio with constant = 0.0

 z
0.0329
0.1959
0.0468
0.5035
sum

E(x)
Var(x)
Sigma(x)
 Calculating returns of combinations of portfolio X and p

Mean, E(rx)
Variance, x2
Covariance (x,y)
Correlation, xy

Table of returns
Mean
11.13%
1200.00%

1000.00%

800.00%

Mean Return
600.00%

400.00%

200.00%

0.00%
0.00% 200.00%

Price and return data for Samsung and Symphony company

Prices Returns
Symphony Samsung
37.4
33.53 -16.97%
30.73 -9.18%
30.15 -0.25%
36.38 15.39%
39.79 5.98%
43.04 -7.36%
 40.66 -24.14%
41.85 5.80%
42.36 5.48%
40.29 11.82%
37.03 -10.49%
55.37 90.91%
53.31 2.44%
54.76 5.81%
54.54 0.58%
54.29 4.96%
51.9 2.98%
52.99 8.33%
48.92 -7.32%
48.87 10.40%
49.17 0.21%
48.9 -3.58%
50.25 1.31%
51.76 -1.92%
54.26 6.53%
56.9 4.12%
52.98 -1.40%
58.84 3.59%
59.95 0.59%

1.63%
0.0093
9.67%
19.52%
11.22%
33.49%

CALCULATING THE MEAN AND STANDARD DEVIATION OF A PORTFOLIO

SYMPHONY Portfolio return Asset returns

-10.92% -13.95% Mean returns
-8.72% -8.95% Variance
-1.91% -1.08% Standard deviation
18.78% 17.08% Covariance
8.96% 7.47%
7.85% 0.24% Portfolio mean return
 -5.69% -14.92% portfolio return variance
2.88% 4.34% Portfolio return standard deviation
1.21% 3.35%
-5.01% 3.40%
-8.44% -9.46%
40.23% 65.57%
-3.79% -0.67%
2.68% 4.24%
-0.40% 0.09%
-0.46% 2.25%
-4.50% -0.76%
2.08% 5.20%
-7.99% -7.66%
-0.10% 5.15%
0.61% 0.41%
-0.55% -2.07%
2.72% 2.02%
2.96% 0.52%
4.72% 5.63%
4.75% 4.43%
-7.14% -4.27%
10.49% 7.04%
1.87% 1.23%

CALCULATING THE EFFICIENT FRONTIER

Variance-covariance matrix Expected returns E(r)
0.02 0 0.06
0 -0.06 0.05
0.3 0.03 0.07
0.03 0.1 0.08

puting an envelope portfolio with constant = 0

Envelope portfolio x
0.0539
0.2998
0.0605
0.5858
1.0000

ting an envelope portfolio with constant = 0.04

Envelope portfolio y
0.0423
0.2514
0.0601
0.6462
1.0000

0.0693219437 E(x) 0.0710111354

Var(y)
Sigma(y)
binations of portfolio X and portfolio Y

9.10% Mean, E(ry)

0.1216 Variance, y2
0.0714
0.4540

200.00% 400.00% 600.00% 800.00% 1000.00% 1200.00%

Standard Deviation

COMPUTING THE COVARIANCE FOR SAMS

Returns Return minus mean
Symphony Samsung

-10.92% -20.58%
-8.72% -12.79%
-1.91% -3.86%
18.78% 11.78%
8.96% 2.38%
7.85% -10.97%
 -5.69% -27.75%
2.88% 2.19%
1.21% 1.87%
-5.01% 8.21%
-8.44% -14.10%
40.23% 87.30%
-3.79% -1.16%
2.68% 2.20%
-0.40% -3.03%
-0.46% 1.36%
-4.50% -0.62%
2.08% 4.72%
-7.99% -10.93%
-0.10% 6.80%
0.61% -3.40%
-0.55% -7.19%
2.72% -2.30%
2.96% -5.53%
4.72% 2.93%
4.75% 0.51%
-7.14% -5.00%
10.49% -0.02%
1.87% -3.01%

covariance

correlation

DEVIATION OF A PORTFOLIO

SAMSUNG SYMPHONY

4.03% 0.11%
0.0402 0.0000
20.06% 0.28%
0.0151

2.62%
 0.0184
13.57%

Expected minus constant E(r) - c

0.02
0.01
0.03
0.04
 12.00%
0.2034

% 1000.00% 1200.00%

COMPUTING THE COVARIANCE FOR SAMSUNG AND SYMPHONY

Return minus mean product
Symphony

-12.55% 2.5829%
-10.35% 1.3232%
-3.53% 0.1362%
17.16% 2.0210%
7.33% 0.1743%
6.22% -0.6829%
 -7.32% 2.0301%
1.26% 0.0276%
-0.42% -0.0078%
-6.64% -0.5449%
-10.06% 1.4190%
38.60% 33.7006%
-5.42% 0.0630%
1.06% 0.0232%
-2.03% 0.0615%
-2.09% -0.0283%
-6.13% 0.0382%
0.45% 0.0213%
-9.62% 1.0509%
-1.73% -0.1175%
-1.02% 0.0345%
-2.18% 0.1565%
1.10% -0.0252%
1.33% -0.0738%
3.09% 0.0904%
3.12% 0.0159%
-8.77% 0.4385%
8.86% -0.0016%
0.24% -0.0073%

1.5145%
0.0151447785
0.8487109874
 sales growth 20%
current sales/sales 12%
current liabilities/sales 10%
net fixed assets/sales 75%
costs of goods sold/sales 40%
depreciation rate 14%
interest rate on debt 18%
interest paid on cash and marketable securities 10%
tax rate 50%
dividend payout ratio 60%

year 0
income statement
sales 1000
costs of goods sold -500
income payment on debt -32
interest earned on cash and marketable securities 6
depreciation -100
profit before tax 374
taxes -150
profit after tax 225
dividends -90
retained earnings 135

Balance Sheet
cash and marketable securities 80
current assets 150
fixed assets
at cost 1070
depreciation -300
net fixed assets 770
total assets 1000

current liabilities 80
debt 320
stock 450
accumulated retained earnings 150
total liabilities and equity 1000
 1 2 3 4

1120 1254.4 1404.928 1574

-560 -627.2 -702 -787
-32 -32 -32 -32
8 Err:522 Err:522 Err:522
-171 Err:522 Err:522 Err:522
405 Err:522 Err:522 Err:522
-202 Err:522 Err:522 Err:522
202 Err:522 Err:522 Err:522
-121 Err:522 Err:522 Err:522
81 Err:522 Err:522 Err:522

77 Err:522 Err:522 Err:522

112 125 140 157

1371 Err:522 Err:522 Err:522

-471 Err:522 Err:522 Err:522
448 502 562 629
1121 Err:522 Err:522 Err:522

840 941 1054 1180

320 320 320 320
450 450 450 450
231 Err:522 Err:522 Err:522
1121 Err:522 Err:522 Err:522
 5

1762
-881
-32
Err:522
Err:522
Err:522
Err:522
Err:522
Err:522
Err:522

Err:522
176

Err:522
Err:522
705
Err:522

1322
320
450
Err:522
Err:522
 ANNUAL STOCK PRICE AND RETURN DATA FOR SIX STOCKS
Price data
Date GE MSFT JNJ K BA IBM
1991 2.36 2.68 6.78 20.37 2.34 11.79
1992 4.15 2.64 7.2 18.47 4.21 14.62
1993 4.98 3.68 10.91 19.9 4.2 15.53
1994 8.8 5.73 19.43 29.03 8.09 20.41
1995 12.51 12.64 24.44 27.59 13.93 30.78
1996 21.64 18.49 29.15 38.01 20.19 31.6
1997 30.57 43.37 38.04 34.14 23.47 30.94
1998 40.51 48.51 39.36 20.93 36.27 39.24
1999 42.42 30.26 43.8 23.52 48.13 48.78
2000 34.82 31.58 55.19 28.7 41.39 51.05
2001 22.25 23.52 52.15 32 32.81 59.63
2002 31.86 28.16 51.49 37.36 48.86 81.95

Shares outstanding 10.56 10.86 2.97 0.41 0.84 0.79

Market value 336.44 305.82 152.93 15.32 41.04 64.74
Percentage of portfolio 36.72% 33.38% 16.69% 1.67% 4.48% 7.07%

Return data
Date GE MSFT JNJ K BA IBM
1992 56.44% -1.50% 6.01% -9.79% 58.73% 21.51%
1993 18.23% 33.21% 41.56% 7.46% -0.24% 6.04%
1994 56.93% 44.28% 57.71% 37.76% 65.55% 27.33%
1995 35.18% 79.12% 22.94% -5.09% 54.34% 41.08%
1996 54.80% 38.04% 17.62% 32.04% 37.11% 2.63%
1997 34.55% 85.25% 26.62% -10.74% 15.05% -2.11%
1998 28.15% 11.20% 3.41% -48.93% 43.53% 23.76%
1999 4.61% -47.19% 10.69% 11.67% 28.29% 21.76%
2000 -19.74% 4.27% 23.11% 19.90% -15.09% 4.55%
2001 -44.78% -29.47% -5.67% 10.88% -23.23% 15.54%
2002 35.90% 18.01% -1.27% 15.49% 39.82% 31.80%

Average 23.66% 21.38% 18.43% 5.51% 27.63% 17.63%

Standard deviation 32.46% 40.71% 18.97% 23.86% 29.93% 13.56%
Variance 0.1053 0.1657 0.0360 0.0570 0.0896 0.0184
 Excess returns VARIANCE-COVARIANC
GE MSFT JNJ K BA IBM GE
32.78% -22.89% -12.42% -15.31% 31.11% 3.89% GE 0.1044
-5.43% 11.83% 23.13% 1.94% -27.86% -11.59% MSFT 0.0686
33.27% 22.90% 39.28% 32.25% 37.93% 9.70% JNJ 0.0212
11.52% 57.73% 4.51% -10.60% 26.72% 23.46% K -0.0004
31.14% 16.65% -0.81% 26.53% 9.49% -15.00% BA 0.0852
4.49% 63.87% 8.19% -16.25% -12.57% -19.74% IBM 0.0106
4.49% -10.18% -15.02% -54.44% 15.90% 6.14%
-19.05% -68.58% -7.74% 6.15% 0.67% 4.14%
-43.40% -17.11% 4.68% 14.39% -42.71% -13.08%
-68.45% -50.85% -24.10% 5.37% -50.86% -2.09%
12.24% -3.38% -19.70% 9.97% 12.20% 14.17%
VARIANCE-COVARIANCE MATRIX
MSFT JNJ K BA IBM
0.0686 0.0212 -0.0004 0.0852 0.0106
0.1657 0.0412 -0.0052 0.0379 -0.0022
0.0412 0.0360 0.0181 0.0101 -0.0039
-0.0052 0.0181 0.0570 -0.0076 -0.0046
0.0379 0.0101 -0.0076 0.0896 0.0248
-0.0022 -0.0039 -0.0046 0.0248 0.0184
 Computing Berger Company's rE with the Gordon mod
stock price, P0 48.28
current dividend, D0
quartetly 0.278
annualized dividend 1.112
dividend growth rate, g
last 5 years 1.90%
last 10 years 3.61%

Gordon model cost of equity

using 5 year's growth 4.25%
using 10 year's growth 6.00%

BERGER, CASHFLOW TO EQUITY,

Year Dividends
1995 827000000
1996 974000000
1997 1137000000
1998 1305000000
1999 1479000000
2000 1724000000
2001 2047000000
2002 2381000000
2003 2746000000
2004 3251000000
2005 3793000000

end 2005 equity data

stock price 61.07
number of shares 3119482000
equity value 190506765740

equity cashflow,end 2005 4814000000

future growth rate
based on 10 year growth rate 16.59%
based on 5 year growth rate 15.82%

Gordon cost of equity

based on 10 year growth rate 19.54%
based on 5 year growth rate 18.75%

THE GORDON MODEL WITH TWO GROWTH RATES

 current dividend 8
growth rate g1 years 1-m (''supernormal'') 35%
growth rate g2 years 6- 8%
number of supernormal growth years 5
cost of equity 18%

Dididend Valuation
PV of supernormal growth years
using Excel NPV
PV of normal growth years, after year 5
share value

year Anticipated Dividend

1 10.8
2 14.58
3 19.68
4 26.57
5 35.87
6 38.74
7 41.84
8 45.19
9 48.8
10 52.71
11 56.92
12 61.48

COMPUTING THE COST OF EQUITY FOR KFC : CLASSIC CA

KFC beta 2.2516

Risk free rate 4.93%
Expected market return, E (rm) 9.88%
KFC cost of equity, rE KFC 16.08%

COMPUTING THE COST OF EQUITY FOR KFC : Tax-adjusted CAPM : rE = rf (1-Tc)+ *[E(rM)-rf (1-Tc)]
KFC beta 2.2516
KFC tax rate, Tc 31.29%
Risk free rate, rf 4.93%
Expected market return, E (rm) 9.88%
KFC cost of equity, rE KFC 18.01%

MEASURING MARKET RISK PREMIUM E(rM)-rf USING HISTOR

Year Price
Jan, 2001 17.32
Feb, 2001 17.49
Apr, 2001 18.37
Jun, 2001 19.28
Aug, 2001 20.02
Oct, 2001 19.56
Nov, 2001 15.31
Dec, 2001 14.06

Average Monthly Return -2.98%

Monthly standard Deviation 9.85%

Annualized return -35.75%

Annualized standard Deviation 34.11%

COMPUTING THE COST OF EQUITY FOR KFC USING THE MARKET RISK PREMIUM E

KFC beta 2.2516

Historical market risk premium 5.50%
KFC tax rate, Tc 31.29%
Risk free rate, rf 4.93%
KFC cost of equity, rE KFC
Classic CAPM 17.31%
Tax-adjusted CAPM 19.24%

COMPUTING THE COST OF EQUITY FOR KFC USING MARKET PRICE/EARNINGS MULTIPLE TO

Market price/earnings multiple, December, 2016 17

Equity cashflow payout ratio 50%
Anticipated growth of market equity cashflow 6%
Expected market return, E (rM) 9.12%

KFC cost of equity calculations

KFC beta 2.2516
KFC tax rate, Tc 31.29%
Risk free rate, rf 4.93%
KFC cost of equity, rE KFC
 Classic CAPM 14.36%
Tax-adjusted CAPM 16.29%

COMPUTING THE COST OF DEBT FOR KFC

1996
Cash and cash equivalents 316000000

Short term borrowings 805000000

Current portion of long term debt 1268000000
Due to Alpa Group. Inc. and affiliates 652000000
Long term debt 8475000000

Interest and other debt expenses, net 636000000

Net debt 10884000000

Net interest cost 5.50%

Total debt 11200000000

Cash paid:
Interest 679000000

Interest cost 5.726%

 Computing Berger Company's rE with the Gordon model

BERGER, CASHFLOW TO EQUITY, 1995-2005

Repurchase of common stock stock issues cashflow to equity
322000000 -112000000 1037000000
412000000 -149000000 1237000000
628000000 -225000000 1540000000
930000000 -269000000 1966000000
840000000 -221000000 2098000000
973000000 -387000000 2310000000
2570000000 -514000000 4103000000
6538000000 -390000000 8529000000
1183000000 -311000000 3618000000
1384000000 -642000000 3993000000
1717000000 -696000000 4814000000

RDON MODEL WITH TWO GROWTH RATES

MPUTING THE COST OF EQUITY FOR KFC : CLASSIC CAPM: rE = rt + * [E(rM)-rt

: Tax-adjusted CAPM : rE = rf (1-Tc)+ *[E(rM)-rf (1-Tc)]

SURING MARKET RISK PREMIUM E(rM)-rf USING HISTORICAL DATA
Return Treasury bill rate Market risk premium

0.98% 0.47% 0.51%

4.91% 0.47% 4.44%
4.83% 0.47% 4.36%
3.77% 0.47% 3.30%
-2.32% 0.50% -2.82%
-24.50% 0.53% -25.03%
-8.52% 0.51% -9.03%

Average Monthly risk premium -3.47%

Monthly standard Deviation 9.87%

Annualized risk premium -41.61%

Annualized standard Deviation 34.18%

EQUITY FOR KFC USING THE MARKET RISK PREMIUM E(r M) -rf

OR KFC USING MARKET PRICE/EARNINGS MULTIPLE TO COMPUTE E (r M)

MPUTING THE COST OF DEBT FOR KFC
1995
282000000

1818000000
750000000
227000000
9723000000

666000000

12236000000

12518000000

633000000
year on year growth

19.29%
24.49%
27.66%
6.71%
10.10%
77.62%
107.87%
-57.58%
10.36%
20.56%