BUSN3300 - Financial Planning Assignment
Personal Finance (BUSN 3300)
Financial Planning Assignments
Fall 2022
1. Refer to Step 8 of the Stock Portfolio Assignment Stock Valuation: Assume each company stock has an expected (constant) dividend growth rate of 1.35% and a required rate of return of 10.7%.
(a) Calculate the intrinsic value of each company stock you purchased. (b) Determine whether the price you paid for the stock was just right, overvalued or undervalued
· Intrinsic value in this method means the value of the stock is based solely on the expected rate of growth of the dividend the company pays.
Note: If the price you paid was more than the value you calculated the stock was overvalued. If the price you paid was equal to the value you calculated the price was just right. If the price you paid was less than the value you calculated the stock was undervalued.
Formula: P = D0(1 + g)/ (R – g); where:
P = stock price; D0 = current dividend; R = Required rate of return; g = constant growth rate
|
Variables |
Company 1 |
Company 2 |
Company 3 |
Company 4 |
|
Dividend when you purchased the stock (D0) |
4.00% |
0.58% |
2.31% |
3.00% |
|
Dividend Growth Rate (g) |
1.35% |
1.35% |
1.35% |
1.35% |
|
Required Rate of Return (R) |
10.70% |
10.70% |
10.70% |
10.70% |
|
Intrinsic Value (P) |
43.3583 |
6.2870 |
25.0394 |
32.5187 |
|
Purchase Price (price you paid) |
118.28 |
155.81 |
128.48 |
331.48 |
b) Company 1 – overvalued
Company 2 – overvalued
Company 3 – overvalued
Company 4 - overvalued
Sheet1
| Part 1 | |||||
| Required | Selection 1 | Selection 2 | Selection 3 | Selection 4 | |
| Company Name | Digital Realy Trust, Inc. | Apple Inc. | QUALCOMM Incorporated | The Goldman Sachs group, inc. | |
| Company Symbol (Ticker) | (DLR) | (AAPL) | (QCOM) | (GS) | |
| Website Visited | finance.yahoo.com | finance.yahoo.com | finance.yahoo.com | finance.yahoo.com | |
| Date Visited | 9/3/22 | 9/3/22 | 9/3/22 | 9/3/22 | |
| Stock Features | |||||
| Price to Earnings Ratio (P/E Ratio) | 118.28 | 25.75 | 11.39 | 7.49 | |
| Current Dividend ($) | 4.88 | 0.92 | 3 | 10 | |
| Dividend Yield (%) | 4.00% | 0.58% | 2.31% | 3.00% | |
| Earnings per Share (EPS) | 4.58 | 6.05 | 11.28 | 44.28 | |
| Beta | 0.32 | 1.23 | 1.24 | 1.39 | |
| Market Capitalization: | 34.74 | 2.504 | 144.283 | 113.153 | |
| Part 2: Purchase the stocks you selected. Allocate your cash ($10,000) among the stocks | |||||
| Stocks Purchased: Only small change may be unspent | |||||
| Company Ticker/symbol | Date Purchased | # of Share (n) | Price per Share (p) | Total Cost (C) = (n x p) | |
| DLR | 9/3/22 | 10 | 118.28 | 1182.8 | |
| AAPL | 9/3/22 | 12 | 155.81 | 1869.72 | |
| QCOM | 9/3/22 | 15 | 128.48 | 1927.2 | |
| GS | 9/3/22 | 15 | 331.48 | 4972.2 | |
| 9951.92 | |||||
| Part 3: Sell all your stocks and calculate the results | |||||
| Stocks Sold | |||||
| Company Ticher/Symbol | Date Sold | # of Share (n) | Price per share (p) | Total Sale ( S ) = (n x p) | Gain (Los)s (S - C) |
| DLR | 12/5/22 | 10 | 109.16 | 1091.6 | -91.2 |
| AAPL | 12/5/22 | 12 | 146.63 | 1759.56 | -110.16 |
| QCOM | 12/5/22 | 15 | 123.3 | 1849.5 | -77.7 |
| GS | 12/5/22 | 15 | 371.54 | 5573.1 | 600.9 |
-
Rating:
/5
Solution: BUSN3300 - Financial Planning Assignment