As a manager, it is important to understand how decisions can be analyzed in terms of alternative courses of action and their likely impact on a…

As a manager, it is important to understand how decisions can be analyzed in terms of alternative courses of action and their likely impact on a firm’s value. Thus, it is necessary to know how stock prices can be estimated before attempting to measure how a particular decision might affect a firm’s market value.

To prepare for this Assignment, choose a publicly-traded company, and then estimate your company’s common stock price, using one of the valuation models presented in the assigned readings or outside readings. (If you want to analyze a dividend paying company, you can find a robust list athttp:// addition, here is a template you will find to be useful for the assignment. It matches the examples given in the textbook on stock valuation models in Chapter 9:

Stock Models (Excel workbook)

Defend your choice of model, and explain why it is appropriate to use for your company’s stock. Be sure to explain how you arrived at any assumptions regarding values used in the model. Determine whether your company appears to be correctly valued, overvalued, or undervalued based on your company’s stock current price and model result. Check Yahoo Finance for current stock prices. Finally, explain why your company’s stock appears to be over-, under-, or correctly valued.

To help you with this assignment, please review the following documents:

Week 4 Application Instructions

I will like to choose Walmart or

  • a) Calculate the required rate of return (r) for the stock using the Capital Asset Pricing Model (CAPM).

r = (10-year Treasury Bond Yield) + [Beta (S&P 500 Index Return – 10-year Treasury Bond Yield)]

Search for 10-year Treasury Bond Yield using the Search box at

S&P 500 Index Return for 2014 can be obtained at  Since the return for 2015 was negative, we can use the 2014 value of 11.39%.

Plug in the data and calculate the required rate of return using the value for beta.

b) The constant growth rate of dividends, g = retention ratio x ROE

= (1 – payout ratio) x ROE

= [1 – (dividend per share/EPS)] x ROE.

g will be a percentage.  Convert to a decimal by dividing by 100.

c) Intrinsic value of stock = Po = [Do (1 + g)]/(r – g)

Do is the dividend just paid while D1 = Do (1 + g) is the dividend to be paid.

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

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.

Money-back guarantee

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 more

Zero-plagiarism guarantee

Each 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 more

Free-revision policy

Thanks 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 more

Privacy policy

Your 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 more

Fair-cooperation guarantee

By 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