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Working with Yahoo!Finance. The Company that has been chosen Exxon Mobil Corp. (XOM) . Part A-Fundamental...

Working with Yahoo!Finance. The Company that has been chosen Exxon Mobil Corp. (XOM) .

  • Part A-Fundamental Valuation:
    1. Estimate a growth rate for your firm's Dividends per Share.
    2. Assume a 12.5% discount rate.
    3. Calculate an estimated value of a share of the stock using the constant-growth model (Eq. 8-6 in the textbook), also known as the Gordon growth model.
    4. Compare and contrast your valuation results with the current share price in the market.
    5. Respond to this question: What changes in the variables would be necessary in your valuation to best approximate the market valuation?
  • Part B - Relative Valuation:
    1. Estimate a growth rate for your firm's Earnings per Share (EPS).
    2. Determine an applicable Price-Earnings (P/E) ratio for your firm in 5 years.
    3. Calculate an estimated value of a share of the stock in 5 years using the P/E ratio model (Eq. 8-10 in the textbook).
    4. Respond to this question: Would you characterize your stock as undervalued or overvalued? Explain.
    5. Respond to this question: Based on your valuations in parts A and B, would you invest in this stock? Explain.

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Expert Solution

jeff jeffy answered 1 year ago
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