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(Solved): Choose a publicly traded stock to research. Examples include: Bank of America; Daimler AG; Dow Chemi ...



Choose a publicly traded stock to research. Examples include: Bank of America; Daimler AG; Dow Chemical; Harley- Davidson; General Electric; EBAY; Best Buy; Microsoft; Coca-Cola; Procter and Gamble; or a stock of your choosing (if you choose a stock that you cannot answer the questions below, then you will need to choose a different stock). Within an Excel spread sheet answer the following questions. Clearly label your answers and the question number. All of the needed information can be found for most stocks by using the resources at Yahoo Finance. If you use a different source, clearly indicate the source of your information. All calculations should be done within Excel. What stock did you choose? Record the current stock price and the date. What is the last dividend that was paid? (The answer could be that the firm does not pay dividends) What is the current dividend yield (calculate by dividing the current annual dividend by the stock price)? What is the firm's current earnings per share (EPS)? Estimate the intrinsic value of your firm by assuming that, as the owner, you will receive an amount equal to the EPS every year forever (you will use the perpetuity formula). Assume a required rate of return of 0.091 (this is a decimal - not a percentage). Suppose you think the firm’s EPS will grow at the rate of 0.03 forever. Compute the current value of the stock by using the constant growth formula. Assume the required return of 0.091 and that next year you will receive EPS that grew at the 0.03 rate. Graph the value of the stock assuming different growth rates that vary from 0 to 0.091. Use the EPS as an estimate of the current dividend (CF). Assume a required rate of return of 0.091.



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