As a new junior analyst for a large brokerage firm, you are excited to demonstrate the skills you learned in college and prove that you are worth your attractive salary. Your first assignment is to analyze Ford (F). Your boss recommends determining prices based on the dividend cash flow model. Your boss will allow you to work with one other analyst.

1. Calculate the intrinsic value for Ford using the Dividend Growth Model Use FactSets estimate of Dividends per share in 2017. Use FactSet to derive an estimate of Fords cost of equity using the CAPM. Use a 2% perpetual growth rate.

2. Next perform What-If analysis. Allow the cost of Capital to vary in one percent increments. Allow the dividend growth rate to vary in one half of a percent increments. For both choose a reasonable upper and lower bound. Try to avoid break downs in the model.

3. Assume that Fords dividends will grow at the long term rate predicted by FactSet (for earnings) for the years 2018-2020 and then revert to the perpetual growth rate. Find the stock price.

The body of the report should consist of a memo to your boss explaining your analysis. It should be no longer than 2 pages. Your memo should answer the above questions. This does not mean you should write it as answers to each question. Rather your recommendation will include the information necessary to address these issues. Spreadsheets should be submitted as appendices. You should evaluate each model and provide your boss with a recommendation.

**I just need assistance with understanding the recommendation part of the assignment. I have already completed the spreadsheet and see the results, but am not certain what kind of recommendation to provide.

Ford (F)
Current Stock Price	12.81
Long Term Growth	-0.054
shares Outstanding	3974
Estimated EPS 2017	1.65
dividend 2017	0.66
Beta	1.06
Risk Free	0.01778
Market Risk Premium	0.05
Growth after 5 years	0.02
Req. return equity	0.07078