finance-The applied project on FedEX is a two-page single space memorandum

The
applied project on FedEX
is a two-page single space
memorandum plus appendices that values a publically traded stock using
two methods. The student is responsible
to choose a stock (FedEx)
to value; collect relevant data; research relevant information regarding
underlying data and perform the necessary analysis to determine if the current
market price is above or below a computed intrinsic price. The initial selection of the firm will impact
the overall assignment. I would suggest
the firm you choose to be in good financial health, pay a dividend and have
easilty excessible data. I would
prefer that you analyze a firm that interests you as an investor. A source of information that could be used
(there are many sources of financial information) would be finance.yahoo.com.

Below
are steps that you can take in completing the assignment. Note the project deliverable is a 1-2 page
single space memorandum that summarizes the following steps. DO NOT COPY AND PASTE YOUR ANSWERS TO THESE
AS THE DELIVERABLE. The answers to these
questions should be seamlessly written within the 1-2 page memorandum. The computations will be completed in
EXCEL. Clearly indicate where
you find any supporting information by copying the URL or other appropriate
citation into your document. You will
also turn in your analysis by submitting both the word document and the spread
sheet you used for your computations.
Below represent basic questions and the breadth of the concept should be
expanded as appropriate.

What firm are you
choosing (discus the firm’s essential attributes that would interest an
investor)?

What was the
stock’s price range during the last year?
What is the stocks current stock price?

What is firm’s current
dividend? What is its dividend
yield? (Is there any recent news or
announcements related to dividends)

Discuss briefly
the concept of corporate governance within your chosen firm (recommended
source is the firm’s ‘investor website’).

What growth rate
do you expect over the upcoming year?
What do you base that growth rate on? (This information would be available at
yahoo finance under analyst estimates or other investment related research
site).

What is the
estimated beta of the firm? Where
did you get the estimated beta? (This
information would be available at yahoo finance or other investment
related research site).

Calculate the
firm’s required rate of return based on their beta. Be clear what all of your assumptions
are. You should use the CAPM to
compute the required rate of return.
(You will need to research the risk free rate of return by
searching for the current one year treasury rates of return. You will also need to assume an expected
market return. You can search for
expected stock market returns in 2014.
You can also use historical estimates of the market risk premium by
taking the difference between the historical average return on the market
and the average Treasury Bill. This
information is available online (the current t-bill rate is available at
the US Treasury website; the expected market return is available at yahoo
finance website under analysts’ expectations and other investment research
sites).

Estimate the free
cash flows available for the firm for the next 3 years then assume the
cash flows will grow at an appropriate assumed rate of growth. Explain where you attained your numbers. (This information would be available at
yahoo finance or other investment related research site. The Yahoo site will give you the current
free cash flow. You would then use
the growth rate to estimate cash flows in future years).

What is the value
of the firm based on the Free cash flow model (i.e. if you are valuing the
firm based on its total cash flows available to equity holders)? What is the value of the firm on a per
share basis? (Attain share
information at the Yahoo website or other investment related website).

What is the value
of the firm based on the constant dividend growth model? You will need to estimate future
dividends to shareholders based on the overall growth rate of dividends. (If the firm you are researching does
not have any dividends then assume dividends are equal to the current
earnings per share or assume some future dividend and growth rate).

Would you
recommend that an investor buys or sells the firm based on its current
price, why?

What do
professionals recommend (i.e. are there buy or sell recommendations on the
stock). (This information would be
available at yahoo finance or other investment related research
site).

Are there other
factors related to the stock that you believe an investor should consider? (Discuss the uncertainties associated
with the firms industry or operations)?