Calculate the required return on the stock

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Use the Company Apple Inc. for the tasks and the link for more information.

https://uk.finance.yahoo.com/quote/AAPL?p=AAPL

(1) Using the beta published by Yahoo Finance (or other data provider), risk-free rate equal to 3-month treasury bond yield and a 5-year return on appropriate market index, calculate the required return on the stock. (Hint: use CAPM formula).

(2) Get the last 10 years of dividend information, and calculate the compound annualised growth rate of dividends. Do you think the dividends are likely to grow at this rate in the future? Explain why or why not. If not, what alternative growth rate you can suggest?

(3) Using the Gordon growth model and your outputs in questions 1 and 2 calculate the intrinsic value of the stock. Is the value obtained sensible compared to the current market price? Is the stock undervalued or overvalued?

Show calculations and excel sheet with formulas.

Reference no: EM133070314

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