Turbo Technology Computers
Investors look at dividends for a few different reasons. Dividends can be a source
of regular income or an indicator of a company’s financial stability. According to the
calculations the current value of Turbo Technology Computers’ stock is $25.25. This
calculation used the growth of their dividends but does not take into account for any other
outside factors such as the economy, market, or politics. If the current actual price on the
stock exchange is below $25.25 then the stock could be considered undervalued while if
it is over $25.25 it is over valued. I would also like to note that dividend yield over the
three year period is increasing while on the other hand capital gains yield is decreasing.
This could be important to investors because it shows Turbo is paying out dividends to
investors more rather than reinvesting the excess cash into the company. Some investors
see this as a stable company to invest in. So we can assume that Turbo is an established
company with stable growth (Mannion2023).
Kassidy’s Kabob
Every investor has their own required rate of return that usually relates to risk or
how much risk the investor is willing to take on. The required rate of return sets the bar
as a percentage for the lowest return the investor is comfortable with. Kassidy’s Kabob
House’s rate of return was calculated at 10%. If the dividend stays at $5 but the price
goes below $50 then the investment won’t be as preferable as the rate will decrease also.
McCaffrey’s Inc.
We used the free cash flow method to value McCaffrey’s stock since they do not
pay dividends. We estimated the stock price at $40 so if the actual price is below $40
then it is undervalued and could be considered a good buy. The free cash is expected to
grow so the company should be stable. On the other hand if the price is above $40 then
the stock could be overvalued and the investor may want to sell if they hold any shares.
Refrences
Mannion, M. (11 December 2023). What is a dividend yield. J.P. Morgan Wealth
Management. https://www.chase.com/personal/investments/learning-and-
insights/article/what-is-a- dividend-yield
Required Rate of Return - Definition and How to Calculate.8(n.d.). Retrieved August 17,
2024, from https://corporatefinanceinstitute.com/resources/career-map/sell-side/
capital-markets/required-rate-of-return.
