Assignment: Stock Valuation
The purpose of this assignment is to allow students the opportunity to practice stock valuation problems and to locate financial information on the Internet, which can be used to expand their knowledge of how stocks behave.
Resources: Stock Valuation Template
Calculate the following stock valuation problems:
• Company X is paying an annual dividend of $1.35 and has decided to pay the same amount forever. How much should you pay for the stock, if you want to earn an annual rate of return of 9.5% on this investment?
• You want to purchase common stock of Company X and hold it for 7 years. The company just announced they will be paying an annual cash dividend of $6.00 per share for the next 9 years. How much should you pay for the stock, if you will be able to sell the stock for $28 at the end of seven years and you want to earn an annual rate of return of 11% on this investment?
Select one of the companies studied by one of the group members in Week 3.
Search the Internet for financial information about the company selected.
Evaluate the following in a 525-word response:
• Characteristics of common and preferred stock.
• How stock markets work.
• The connection between the value of shares and dividends.
• Mention the ticker symbol of the company studied, the current price of the stock, and its financial history.
• Indicate if you would recommend investing in this stock and why. Explain.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.