Financial Mgmt Ip3

American Intercontinental University attempt and Capital FINA310-1202A-06 Financial management delineate face: Unit 3 Individual Project April 8, 2012 Abstract Using the federation XYZ and its stemma information provided in the assignment guidelines as hearty as the link provided to Bloomberg, give assist in the calculations for this project. One of the important objectives is the understanding of how speculative transmit prices ar calculated as well as the effects of merchandise forces such as stakes ad interest paces. Using the guidelines provided and the formulas from the textbook here is how the calculations argon achieved. ? Risk and Capital Risk-free rate of Interest The estimate of the risk-free rate of interest for a10-year rate for government bonds is 2.18% (Bloomberg, 2012). The assumed market risk premium is given as 7.5%. Values The quest information was retrieved from the XYZ filiation information and is a s follows: XYZs beta (ß) = 1.64 XYZs occurrent annual dividend = $.80 XYZs 3-year dividend growing rate (g) = 8.2% Industry P/En = 23.2 XYZs EPS = $4.87 CAPM CAPM will outright be used to calculate the companys undeniable rate of return (ks). CAPM: ks = Rf + (E(rm) - rf) x Beta (Brooks, 2013) ks = 2.18% + 7.5% x 1.64 = 14.48% ks = 14.

48% Current Stock plagiarize (P) Using GCM, the current livestock price for XYZ will be calculated and this will be the theoretical price (Po). Po= Divo x (1+g) (Brooks, 2013) r-g Po = $.80 x (1+ 8.2%) = $7.36 = 1.1719 or $117.19 14.48% - 8.2% 6.28% Comparing Po and P The current stock repeat with XYZs stock information (P) wil! l be put in and compared to the (Po) to determine if there are any differences as well as the factors for the difference in the ii prices. P = $76.28 Po = $117.19 in that location is a difference in the above two prices. The CGMs response to the dividend growth rate, discount rate, and expected dividend grade are factors for the difference in the two...If you want to get a wide-eyed essay, order it on our website: OrderEssay.net

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