1. Find the Beta coefficient of the stock. a. See handouts for methods of calculating Beta. b. Compare to the published Beta c. Reasons for difference, if any?
2. Find the required rate of return for your company. a. Use the CAPM method to determine the cost of equity b. Use the Treasury 10 year Bond as the risk free rate c. Calculate market risk premium and the company stock risk premium.
3. Determine growth rate of the company's EPS and/or Dividends. a. Use methods provided in class. b. Calculate growth rate and compare to analysts'. c. Look at the various sites on the web to compare your growth forecast with Professional estimates. Here are just a few of the sites available to you. i. https://my.zacks.com ii. https://finance.yahoo.com iii. https://www.quicken.com/ d. What do you think about your growth rate? How close are your estimates to the actual?
4. Predict the price of the common stock using models provided. Is the company maximizing the wealth of the shareholder? If not, what can they do achieve this result? a. Discuss differences of actual vs. calculated stock price. b. If the firm has non-constant growth, then assume a constant growth rate at the end of the tenth year. c. Please include the Free Cash Flow method along with the traditional we have to apply these calculations for Zain -Kuwait company after downloading the historical prices for the company for the last 5 years
the methods
discount method
dividend growth rate
multiple analysis
calculate the FCF we need to have an assumptions
• forecasting growth rate should be positive
• historical growth rate should be positive
• tax rate 2.5%
• depreciation current asset should be 10% unless it mentioned.