Reference no: EM13868158

For your Final Project, you and your team have to answer a series of questions related to the company that you already start to follow since project one. (ex. GE, IBM, MCD, etc.). You have to prepare a report with the answers for every question supported by documents obtained from different sources such as Mergent, Reuters, Yahoo Finance or Google Finance.

At the end of the document, you and your team have to write a conclusion related to the actual situation of your company and the recommendation for a potential investor.

Questions that have to be answered for your Final Project

1. What is the current stock price of your company?

2. How has the stock performed relative to the market over the past six months? Use a chart to explain.

3. Have there been any recent events impacting the company's stock price, or have things been relatively quiet? Explain.

4. What is the firm's current P/E ratio? Is the firm's current P/E ratio well above or well below its latest 5-year average? Do you have any explanation for why the current P/E deviates from its historical trend?

5. On the basis of the P/E information, does the firm's current P/E suggest that the stock is undervalued or overvalued?

6. Let's assume at first that the firm's dividend is expected to grow at the same rate as the last 5 years over time. If so, intrinsic value can be calculated using the Dividend Constant growth model. Estimate the Price of the stock based on this model and say if the current price is undervalued or overvalued in comparison to your calculation.

7. Calculate the required rate of return of the company using the CAPM. (You will require current beta of the company, risk free rate (t-bill 90 days) and the expected return of the market (S&P500 average return in last five years).

8. Conclusion: Based on this analysis (and other possible analysis that you want to add) write your recommendation (buy, hold or sell) for a potential investor that is considering invest in this company.