Estimate a growth rate for your firms earnings per share

Assignment Help Financial Management

Reference no: EM131983621

Select ONE of the four (APPLE) companies provided by your professor for analysis. APPLE is the company

Write a 1-2 page (approximately 500 words) paper on the following:Part A-Fundamental Valuation:

Estimate a growth rate for your firm's Dividends per Share.

Assume a 12.5% discount rate.

Calculate an estimated value of a share of the stock using the constant-growth model (Eq. 8-6 in the textbook), also known as the Gordon growth model.

Compare and contrast your valuation results with the current share price in the market.

Respond to this question: What changes in the variables would be necessary in your valuation to best approximate the market valuation?

Part B - Relative Valuation:

Estimate a growth rate for your firm's Earnings per Share (EPS).

Determine an applicable Price-Earnings (P/E) ratio for your firm in 5 years.

Calculate an estimated value of a share of the stock in 5 years using the P/E ratio model (Eq. 8-10 in the textbook).

Respond to this question: Would you characterize your stock as undervalued or overvalued? Explain.

Respond to this question: Based on your valuations in parts A and B, would you invest in this stock? Explain.

Reference no: EM131983621

Questions Cloud

How much will it cost you to buy a seat : Assume that Schenkel uses cumulative voting, and there are four seats in the current election. How much will it cost you to buy a seat?

Calculate the return on assets for the year : Calculate the return on assets for the year, presenting your answer in percentage terms, rounded to two decimal places. e.g. 20.00%.

Application of incremental costing : How do you analyze the "Peak Pricing: An Application of Incremental Costing" from Chapter 9 example and compare this example of peak and off-peak

What sales volume will result in a net profit : A summary of budged income statement of Port Williams Gift. What sales volume will result in a net profit of $ 40,000 after spending $ 200,000 on advertising?

Estimate a growth rate for your firms earnings per share : Calculate an estimated value of a share of the stock in 5 years using the P/E ratio model (Eq. 8-10 in the textbook).

Compare incremental costs and avoidable costs : Can you help me compare incremental costs and avoidable costs? How do you incorporate the impact each has on prices? What are some examples to the comparison.

Does the seller need to hold the stock for any certain time : Does the seller need to hold the stock for any certain period of time in order to achieve capital gain treatment?

Communication skills to influence others : Describe an example of an appropriate way in which we can use communication skills to influence others.

How much money is still available in the investment : A sum of $1,000 is invested and draws interest at the rate of 8 percent. How much money is still available in the investment after the 20th annual withdrawal?

User Account

All Pages