Question
1)Last year sales for the S&P 500 were $1,700/share.If growth is expected to be 2.5%, operating margin 11.5%, interest expense 3% of sales, and tax
1)Last year sales for the S&P 500 were $1,700/share.If growth is expected to be 2.5%, operating margin 11.5%, interest expense 3% of sales, and tax rates 19%, what is the fair value of the S&P 500 if the RFR is 1% and market risk premium is 4%?
2)What is the fundamental P/E of the S&P 500 if growth is 3%, RFR is 2%, and market risk premium is 4%?The ROE is 10%.
3)What are the four areas that you want to cover when performing industry analysis?
4)What are Porter's five forces and how would you describe each one?
5)You have a full top down analysis and are most excited the absolute best company in a very non-competitive industry that has insanely high profit margins.Because of the fantastic position of this company in the industry you advocate it as an incredible investment.Your supervisor is not convinced and states that it is not an attractive investment at all after she assesses the fundamental valuation of the firm and its current share price.Why is she correct?
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