Assignment Description
Given that Dr. Bueller wants to make stocks a major part of his investment portfolio, you decide to focus on how to analyze stocks. You decide to use a large U.S. industrial company, to demonstrate how to analyze stocks.
The research department has provided you with the following information regarding this company.
This year (2009), free cash flow is expected to reach $325 million.
In 2010, it is expected to reach $350 million.
2011, $400 million.
2012, $425 million
And 2013, $450 million.
The analyst has projected an intrinsic value for this stock of $65.00.
Dr. Bueller is busy this week, so he asks you to send him an e-mail. Compose an e-mail that in addition to explaining the following information for the industrial company, which is a publicly traded company that trades on the NYSE, addresses the efficient market hypothesis, and how the analyst responsible for monitoring this stock has projected this intrinsic value for the company’s stock.
52-week range: Hi 75 Lo 35
Current stock price: 50
Dividend Yield: 2.75%
Dividend per share: 1.375
P/E ratio: 20
Earnings per share: $2.50
Shares outstanding: 100 million
Market capitalization: $5 billion
Cost of capital: 9%
Growth rate of free-cash-flows beyond 2013: 3%
Assignment Guidelines
Using the textbook, course materials, and Web resources, find the definitions for the ten values listed above in the Assignment Description.
In your own words, rewrite the definition for each of the ten values.
Demonstrate how to calculate the values using the information from the company’s stock as an example.
Next, answer the following questions:
What is the efficient market hypothesis, and what is its relationship to stock valuation?
What is the free-cash-flow approach to valuing stocks?
Using the free-cash-flow approach, how did the analyst arrive at an intrinsic stock value of $65 for the company?
Compile your definitions, calculations, and your answers to the three questions above into a single Word document.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more