$1.$ Calculate the share value of ExxonMobil by using Dividend Discount Model

a$.$ Provide a summary quote of ExxonMobil $($please use Yahoo Finance$)$ Estimate a discount rate for ExxonMobil by using the CAPM. $($by using a T$-$bills rate of $1\mathrm{.}6\%$ and market risk premium is $8\mathrm{.}3\%,$ and the ExxonMobil$$s Beta from the summary quote that you get in part a$).$

c$.$ Next, calculate a sustainable growth rate. To calculate a sustainable growth rate, use the company$$s most recent earnings per share, annualized dividend per share from the summary quote $($in part a$)$ and calculate the retention ratio. Next step to find the most recent ROE of ExxonMobil from the financial highlight $($Key Statistics, Yahoo Finance$),$ then calculate the sustainable growth rate of ExxonMobil $($Provide the snapshot of key statistic for the company$)$

d$.$ Calculate the share value of ExxonMobil by using the discount rate and sustainable growth rate that you found in part b and c$.$ To calculate the share value, use the constant dividend growth model. $*****$SHOW STEPS FOR EACH QUESTION $***2.$ Calculate the share value of ExxonMobil by using Free Cash Flow Model

Remember, when you use FCF model, you are valuing the whole firm, not just equity. Thus, you need to find firm level discount rate. For this follow the below steps.

a$.$ First, calculate the asset beta by using below equation.

Use the Equity beta from question $1($a$),$ and use the debt to equity ratio from Yahoo Finance, and use the tax rate of $21\%$ is the standard marginal tax rate for most large corporations.

b$.$ Second, calculate the discount rate by using CAPM. Use the T$-$bills rate of $1\mathrm{.}6\%$ and market risk premium is $8\mathrm{.}3\%$ to obtain the discount rate for ExxonMobil.

c$.$ Next, calculate the firm value of ExxonMobil using the FCF model, which is in below.

Firm value $=$ FCF $(1+$ growth rate$)/($discount rate $-$ growth rate$)3.$ Calculate value of stock using price ratios. To value a stock using the price ratios, you need three pieces of information:

a$.$ The average historical price multiple $($ P$/$E$,$ P$/$CF$,$ and P$/$S$).$ The quick way to find the average historical price is to access the Valuation tab on Morningstar, use the $5$ yrs average price ratios.

b$.$ The current value of the earnings per share, cash flows per share, and sales per share $.$The quick way find them, go to key ratios section at Morningstar or key statistic tab at Yahoo finance.

c$.$ The forecasted growth rate in earnings, cash flow and sales. Please use the Morningstar to find those information.

Next, putting it all together, you will estimate share price as:

Expected share price: P$/$E ratio x EPS x $(1+$ EPS growth rate$)$

Expected share price: P$/$CF x CFPS x $(1+$ CFPS growth rate$)$

Expected share price: P$/$S x SPS x $(1+$ SPS growth rate$)$