FIRM VALUATION TEMPLATE tem What this is Where to find it on Yahool Finance Beta
ID: 2789124 • Letter: F
Question
FIRM VALUATION TEMPLATE tem What this is Where to find it on Yahool Finance Beta Divo Firm beta. Last dividend paid Analysts' expected long-term growth rate. Summary" page. "Summary" page. 1.33 666% 1.80% 7.20% Analysts" page, Growth Estimates table, look for "Next 5 years" Given (no need to change this). Given (no need to change this). Calculate it Elrm) Elr) Expected return of the market Required rate of return. Next period's dividend Estimated intrinsic value (price). Calculate it! Summary" page. Think about it... (click on the cell, then on down arrow to display menu) P (market) 03.44 Current market price. Given the data, what should you do?Explanation / Answer
Answer ) Expected return = Risk free rate + Beta * (Market return -risk free rate)
= 1.8% + 1.33*(7.20%-1.8%)
= 8.98%
D1 = D0 * (1+g) = 1.56*(1+0.066) =1.66296
Price = D1/ (r-g)
= 1.66296 / (0.0898-0.066)
= 69.8136
Current market price is 103.44, that mean the stock is over valued. and we need to sell the stock
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