I need help for Finance assignment

Due at the beginning of class on November 15, 2016

Assignment #2 Stock Valuation

A. Choose a stock that interests you. Utilizing Bloomberg, Yahoo Finance, or Google Finance, etc.

as a source of data, collect the following information:

a. The stock’s Beta

b. Use the 1yr market risk premium from Kenneth French’s website

c. The risk-free rate (𝑟𝑅𝐹) d. The last dividend paid (𝐷0) e. The annual expected growth rate of earnings

B. In Excel, use the Discounted Dividend Model for Constant Growth Stocks and solve for the

intrinsic stock price (𝑃0̂)

Based on your above calculations, compare the calculated price with the current market price and

indicate whether is the stock price overvalued, undervalued, or at equilibrium? Explain.

C. Now, assume that your company has just released a new product and will be experiencing

supernormal growth of 25% for the next three years. In Excel, use the information in “A” and

the Discounted Dividend Model for Nonconstant Growth Stocks and solve for the intrinsic stock

price (𝑃0̂).