Outside Estimate Outside estimate of earnings growth Historical growth Enter EPS from 5 years ago Fundamental Growth

Current EPS $2.15 Current Dividend/Share $1.12 Book value of equity $11.01 The following will be inputs for the calculation of fundamental growth ROE 19.53% Retention ratio 47.91% Growth Rate 9.00% 7.32% 9.36% 8.60% Weight 0.4 0.3 0.3 9.00%

$1.51

Outside estimate = Historical growth = Fundamental growth = Weighted Average = Cost of Equity

The cost of equity or discount rate is computed using the Capital Asset Pricing Model Risk free rate = 4.56% Market premium = 5.30% Beta of the stock = 1.1 Discount Rate = 10.39%

DDM

Two Stage Dividend Discount Model

Company Name Current EPS = Current Dividends/Share = Discount Rate = Payout ratio in stable phase Corning $2.15 $1.12 10.39% 50.00% Length of growth stage (no more than 10 years) = High growth rate = Stable growth rate = 5 8.60% 7%

High Growth Phase Year Growth Rate EPS Payout Ratio Dividends/Share Present Value 1 8.60% $2.33 52.09% $1.22 $1.10 2 8.60% $2.54 52.09% $1.32 $1.08 3 8.60% $2.75 52.09% $1.43 $1.07 4 8.60% $2.99 52.09% $1.56 $1.05 5 8.60% $3.25 52.09% $1.69 $1.03

Price at the end of high growth stage = Present value of dividends in high growth phase = Present value of terminal phase = Intrinsic Value =

$33.93 $5.33 $20.70 $26.03

Outside Estimate Outside estimate of earnings growth Historical growth Enter EPS from 5 years ago Fundamental Growth Current EPS $1.12 Current Dividend/Share $0.00 Book value of equity $4.63 The following will be inputs for the calculation of fundamental growth ROE 24.19% Retention ratio 100.00% Growth Rate 16.00% 27.69% 24.19% 18.98% Weight 0.7 0.15 0.15 $0.33 16.00%

Outside estimate = Historical growth = Fundamental growth = Weighted Average = Cost of Equity

The cost of equity or discount rate is computed using the Capital Asset Pricing Model Risk free rate = 4.56% Market premium = 5.30% Beta of the stock = 1.8 Discount Rate = 14.10%

FCFE

Three Stage Free Cash Flow to Equity

Company Name Current EPS = Capital Exp as % of earnings = Current Capital Spending/sh = Depreciation as % of earnings = Current Depreciation/share = Chg. Working Capital as % of earnings = Chg. Working Capital/share = Enter the discount rate = High Growth Phase Year EPS (CapEx-Depreciation)*(1-DR) Chg. Working Capital *(1-DR) FCFE Present Value Transitional Growth Phase Year Growth Rate EPS (CapEx-Depreciation)*(1-DR) Chg. Working Capital *(1-DR) FCFE Present Value End-of-Life Index 1 $1.33 $0.38 $0.50 $0.46 $0.40 6 17.78% $3.15 $0.89 $1.16 $1.10 $0.50 0 Corning $1.12 67.86% $0.76 32.49% $0.36 46.78% $0.52 14.10% 2 $1.59 $0.45 $0.59 $0.55 $0.42 7 16.59% $3.67 $1.03 $1.35 $1.28 $0.51 0 3 $1.89 $0.53 $0.70 $0.65 $0.44 8 15.39% $4.23 $1.19 $1.56 $1.48 $0.51 0 $3.19 $44.98 $2.20 $4.85 $22.87 $29.91 Length of high growth stage (no more than 10 years= High growth rate = Length of transitional growth stage (no more than 10 years = Stable growth rate = Debt Ratio = 5 18.98% 10 7.00% 20%

4 $2.24 $0.63 $0.84 $0.78 $0.46 9 14.19% $4.83 $1.36 $1.78 $1.69 $0.51 0

5 $2.67 $0.75 $0.99 $0.92 $0.48 10 12.99% $5.46 $1.54 $2.02 $1.91 $0.51 0 11 11.79% $6.10 $1.72 $2.25 $2.13 $0.50 0 12 10.59% $6.75 $1.90 $2.49 $2.36 $0.48 0 13 9.40% $7.38 $2.08 $2.73 $2.58 $0.46 0 14 8.20% $7.99 $2.25 $2.95 $2.79 $0.44 0 15 7.00% $8.55 $2.41 $3.16 $2.98 $0.41 1

FCFE in terminal year = Price at the end of growth phase = Present Value of FCFE in high growth phase = Present Value of FCFE in transition phase = Present Value of Terminal Price = Intrinsic Value =