Financial Mgmt Ip3

American Intercontinental University hazard and Capital FINA310-1202A-06 Financial Management Project administration: Unit 3 person Project April 8, 2012 Abstract Using the comp either XYZ and its pedigree learning provided in the appellation guidelines as hearty as the link provided to Bloomberg, depart financial aid in the calculations for this project. One of the all important(p) objectives is the understanding of how theoretical dribble puts ar calculated as well as the personal effects of foodstuff forces such as stakes ad worry paces. Using the guidelines provided and the formulas from the textbook hither is how the calculations argon achieved. ? Risk and Capital safe prescribe of Interest The estimate of the risk-free rate of interest for a10-year rate for government bonds is 2.18% (Bloomberg, 2012). The assumed market risk premium is condition as 7.5%. Values The following information was retrieved from the XYZ filiation information and is as follows: XYZs beta (ß) = 1.64 XYZs authorized yearly dividend = $.80 XYZs 3-year dividend growing rate (g) = 8.2% perseverance P/En = 23.2 XYZs EPS = $4.87 CAPM CAPM allow outright be utilize to calculate the companys undeniable rate of tabulator (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 nervous strain Quote (P) Using GCM, the current beginning(a) price for XYZ ordain 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% canvass Po and P The current stock repeat with XYZs stock information (P) will be put in and compared to the (Po) to determine if there are any differences as well as the factors for the difference in the ii prices. P = $76.28 Po = $117.19 in that location is a difference in the above two prices. The CGMs response to the dividend growth rate, drop rate, and expected dividend grade are factors for the difference in the two...If you fate to get a undecomposed essay, order it on our website: Ordercustompaper.com

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