Financial Mgmt Ip3

American Intercontinental University guess and Capital FINA310-1202A-06 Financial counseling pop face: Unit 3 Individual Project April 8, 2012 Abstract Using the follow XYZ and its stemma information provided in the assignment guidelines as hearty as the link provided to Bloomberg, allow assist in the calculations for this project. One of the important objectives is the understanding of how abstractive transmit prices ar calculated as well as the effects of foodstuff forces such as stakes ad interest paces. Using the guidelines provided and the formulas from the textbook here is how the calculations ar achieved. ? Risk and Capital Risk-free rate of Interest The estimate of the unhazardous 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 pastime information was retrieved from the XYZ filiation information and is as follows: X YZs beta (ß) = 1.64 XYZs authorized 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 summons (P) Using GCM, the current sprout 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) will be put in and compared to the (Po) to get word if there are any differences as well as the factors for the difference in the ii prices. P = $76.28 Po = $117.19 at that place is a difference in the above two prices. The CGMs response to the dividend growth rat e, discount rate, and expected dividend gra! de are factors for the difference in the two...If you want to get a climb essay, order it on our website: OrderCustomPaper.com

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