Solve the constant growth stock valuation

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Reference no: EM132697041

Amazon

In the business world, it is imperative that each person be able to determine and make recommendations regarding the viability of any purchase, as well as justify the claims made to upper management. Whether the purchase is equipment, stock, or another company, the same techniques and skills are called into play.

The Corporate Performance Report will require you to apply pertinent business concepts to the analysis of a chosen company using data from the company's annual report as well as other sources. Using different business concepts and real-world techniques, you will analyze the strengths and weaknesses of the company and write a report for upper management either recommending or not recommending purchase of the company stock. Just as you would in any business situation, you will be required to revise and improve the pieces of your report as you progress and your final product will be something that could be used in the real business world.

Question 1: Formulate the expected financial returns and associated risks by completing the following calculations.

Calculate the Return on Equity (ROE) using the DuPont system.
Calculate the Constant Growth Stock Valuation (CGSV) and compare it to the current stock price.

Question 2: Research your company's industry and evaluate what type(s) of capital constraints your company must consider in order to be competitive in the market. Explain the appropriate financial techniques that would be used in this evaluation.

Reference no: EM132697041

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