# Finance Assignment | Homework For You

1. Now, let’s check the stability of Beta:

(a) Is there a substantial difference between the four Betas? COMMENT!(5 points)

Don't use plagiarized sources. Get Your Assignment on
Finance Assignment | Homework For You
Just from \$13/Page

(b) How do your estimates compare to the Finance.Yahoo.com beta and the Value Line beta? (5 points)

1. Given the information below, use the CAPM to estimate the required rate of return for MSFT. Round to 2 decimals, e.g., x.xx%, 1.23%

Return on the market portfolio (SPY)RSPY= 9.0%(based on 25 years of historical data); the risk free rate is

Rf= 3.0%(based on L-T inflation rate of 2.0% & real return of 1.0%); USE MSFT beta estimate: b= 1.10

(5 points)

1. Based on past trends and ValueLine estimate, let’s assume MSFT will pay a dividend of \$1.84 in 2019. Therefore, let’s assume that D1= \$1.84. Let’s also assume that MSFT will grow its future dividends at a L-T constant rate of g = 6%. Assuming a required rate of return found in (8) above, estimate the current value of MSFT using the Constant Growth DDM.   Assume that D1= \$1.84

(10 points)

1. Now, using the Value Linesheet, estimate the average growth rate of dividends for MSFT over the last 10 years, from 2008-2018? Round your growth estimate to 4 decimal places. [Hint: The Growth rate (g) can be calculated as CPT i on your calculator orin Excel as a TVM problem.

[For example: What is the rate of return if you invest \$1 (div0) today and in 10 years it is worth \$4 (div10)?]

(5 points)

1. Two-stage Non-constant DDM:Now let’s assume that for the next four yearsMSFT will grow its dividends at the growth rate you estimated in (10) above. AssumingD1= \$1.84, what are the dividends for: D2; D3; D4; and D5if they grow at the rate estimated in (10) above?  You may round each dividend estimate to the nearest penny. (10 points)
1. Now, let’s assume that the dividend growth reverts back to a L-T sustainable growth rate = 6% afterYear 5, that is from Year 6 to infinity. Estimate is D6and P5.

(5 points)

1. Use the Non-constant growth DDMfrom the Stock Video Lecture (at 17:20) to estimate the current value of MSFT using the dividend information you found in (11) & (12) above; assume a L-T sustainable growth rate of g = 6% after Year 5; and the required rate of return found in (8). [HINT: You already have all the data, not much work left here….find the sum of the PV of the cash flows.]

(10 points)

1. Which of the two models do you think is more reasonable (Constant DDM or Non-constant DDM)?  WHY?

(5 points)

1. What is the current market price of MSFT (see finance.yahoo.com and give the date for quoted price)?

Based on your analysis, would you recommend buying Microsoft stock at quoted current market price?

You must provide a proper explanation of WHY or WHY NOT based on this analysis.  (5 points)

 Microsoft S&P 500 Index Average Monthly Return 1.7997% 1.1048% Standard Deviation 6.4097% 3.9680% Correlation 0.629437 Beta (120 Months) 1.0168 Beta (First 60 Months) 0.9515 Beta (Second 60 Months) 1.1961 Beta (Last 36 Months) 1.1066

Get Finance homework help today

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

At Myhomeworkwriters.com, we always aim at 100% customer satisfaction. As such, we never compromise o the quality of our homework services. Our homework helpers ensure that they craft each paper carefully to match the requirements of the instruction form.

Professional Academic Writers

With Myhomeworkwriters.com, every student is guaranteed high-quality, professionally written papers. We ensure that we hire individuals with high academic qualifications who can maintain our quality policy. These writers undergo further training to sharpen their writing skills, making them more competent in writing academic papers.

Affordable Prices

Our company maintains a fair pricing system for all academic writing services to ensure affordability. Our pricing system generates quotations based on the properties of individual papers.

On-Time delivery

My Homework Writers guarantees all students of swift delivery of papers. We understand that time is an essential factor in the academic world. Therefore, we ensure that we deliver the paper on or before the agreed date to give students ample time for reviewing.

100% Originality

Myhomeworkwriters.com maintains a zero-plagiarism policy in all papers. As such, My Homework Writers professional academic writers ensure that they use the students’ instructions to deliver plagiarism-free papers. We are very keen on avoiding any chance of similarities with previous papers.

Customer Support 24/7

Our customer support works around the clock to provide students with assistance or guidance at any time of the day. Students can always communicate with us through our live chat system or our email and receive instant responses. Feel free to contact us via the Chat window or support email: support@myhomeworkwriters.com.

Try it now!

## Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
\$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Homework Writing Services

My Homework Writers holds a reputation for being a platform that provides high-quality homework writing services. All you need to do is provide us with all the necessary requirements of the paper and wait for quality results.

## Essay Writing Services

At My Homework Writers, we have highly qualified academic gurus who will offer great assistance towards completing your essays. Our homework writing service providers are well-versed with all the aspects of developing high-quality and relevant essays.

Admission and Business Papers

With Myhomeworkwriters.com, we will help you secure a position at your desired institution. Our essay writing services include the crafting of admissions papers. We will still help you climb your career ladder by helping you write the official papers that will help you secure a job. We will guide you on how to write an outstanding portfolio or resume.

Editing and Proofreading

Myhomeworkwriters.com has a professional editorial team that will help you organize your paper, paraphrase it, and eliminate any possible mistakes. Also, we will help you check on plagiarism to ensure that your final paper posses quality and originality.

Technical papers

My Homework Writers harbors professional academic writers from diverse academic disciplines. As such, we can develop homework writing services in all academic areas. The simplicity or complexity of the paper does not affect the quality of homework writing services.