$-$All students are being assigned an individual company to prepare a stock valuation model,

which is to be based on material covered in Chapters $18,7$ and $10.$ I will only allow one stock

valuation model for each company $($no two students can prepare a model of the same company$)$

so it is important that you contact me if you decide to change your assigned company.

$-$As previously announced, I have expanded this assignment to include material that otherwise

would be on the second midterm exam, which is now a part of this assignment. The additional

questions can be found on the following pages.

$-$The assignment requires a copy of the latest annual report $(10-$K$)$ of your assigned company.

You will need to use the financial statements portion to complete the assignment, which can be

obtained through several sources. Some major sources include:

The company's Investor Relations Department.

A business library, such as the Baruch College Library or the Business and Science Library in

New York City.

The company's web site, where a copy can usually be downloaded directly.

A web site that accesses EDGAR, the SEC's corporate filing center. This can be accessed

from Yahoo $($under the company's profile$)$ or through sites such as Free EDGAR

$($

www$.$freeedgar.com$)$ and EDGAR Online $($

www$.$edgar$-$online.com$).$

An annual report service or site, which is provided by major financial information companies

such as Dow Jones or Bloomberg.

$-$A pro forma Income Statement must be prepared in MS Excel, using a minimum projection of

three years, as based on pro forma projections discussed in Chapter $18.$ You need to include the

most recent income statement for your company that is part of the $10-K.$ This information can

then be used to calculate the fair value of the company's stock price, as based on the stock

valuation formulas discussed in Chapters $7$ and $10.$ All assumptions and formulas used for the

pro forma projections and the company's fair value must be included at the end of your model.

A separate attachment provides an example of how this model should be constructed.

$-$Once a fair value is reached, this can be compared to a recent quote of the company's stock

price to determine whether or not the company is fairly valued at its most recent trading price.

As previously announced, you will receive extra credit if your stock quote and income statement

are attained through the Bloomberg Terminal.

$-$The assignment must be handed in by Monday, May $6$th and will count for a total of $25\%$ of

your overall grade. Feel free to leave a message for me in the Economics Department office or

to e$-$mail me at david.debora@qc$.$cuny.edu if you have any questions about the assignment.

Additional Questions for This Expanded Assignment:

$1)$ Please solve for the question marks $($round to the nearest whole number where applicable$)$:

P$.$V$.$ Years Interest Rate Compounding F$.$V$.$

A$)?514\%$ Monthly $$3,725\mathrm{.}00$

B$)$ $$235\mathrm{.}002?$ Semiannual $$935\mathrm{.}00$

C$)$ $$6,250\mathrm{.}00863/4\%$ Simple $?$

D$)$ $$3,750\mathrm{.}00?31/2\%$ Annual $$8,315\mathrm{.}00$

E$)$ Explain the differences between simple and compounded interest rates in light of the results

you attained.

$2)$ Please solve for the value of the following bonds and briefly explain your results:

A$)$ A U$.$S$.$ Government Treasury Strip is quoted in the Wall Street Journal at a market price of

$87$:$19(87$ and $19/32).$ If the strip is scheduled to mature in November $2029,$ what is the annual

interest rate for this bond?

B$)$ Xenor Corporation introduced a bond in $2004$ that offered a coupon rate of $81/2\%,$ resulting

in coupon payments of $$8\mathrm{.}50.$ The bond is scheduled to mature in $2034.$ If the current going

interest rate in the market is $63/4\%,$ what is the market price $($please calculate the interest and

the principal due to get this value$)$ of this bond today? What is the bond selling for in the market

relative to its initial value at the time the bond was introduced and what is the common term used

to describe a bond that is selling at this price?

C$)$ A bond offers a coupon that makes annual payments of $$87\mathrm{.}50.$ The bond was originally set

to mature in $17$ years. A quote for this bond, obtained $15$ years after the original issue date,

listed the market price as $$1,070\mathrm{.}00.$ What is the YTM for this bond?

$3)$ Construct a detailed Fixed Loan Amortization schedule for a $2$ year corporate equipment loan

of $$750,000\mathrm{.}00,$ payable at a $71/2\%$ annual interest rate, with payments scheduled to be made on

a quarterly basis. This loan calls for the payback of $$93,750\mathrm{.}00$ toward the principal with each

scheduled payment. Note that the schedule may be off by several dollars due to rounding. The

schedule should include the following parts, which you should put in the form of a table: A$)$ Beginning Balance

B$)$ Payment per Period

C$)$ Interest Paid

D$)$ Principal Paid

E$)$ Ending Balance

$4)$ Please solve for the value of the following stocks and briefly explain your results:

A$)$ Your research on Skyway Corp. indicates that the company will be paying dividends of $$1\mathrm{.}75$

per share in $2025,$ $$1\mathrm{.}95$