Discounted Cash Flow Model Stock Price (-0.425169494)

Enterprise Value- Debt+ Cash= 41,652,655.01-237,783,000+8,384,000=-187,746,345

Equity Value/ Share Outstanding= 187,746,345/441,580,000= -0.425169494

The Comparable Model Stock Price (186.512759)

EPS*PE Ratio=8.52*21.89=186.512759

Actual Stock Price (308.47)

1. Compare the stock prices produced by the two methods to the actual stock price. What recommendations can you make as to whether clients should buy or sell (COST) stock based on your price estimates?

2. Explain to your boss why the estimates from the two valuation methods differ. Specifically, address the assumptions implicit in the models themselves as well as the assumptions you made in preparing your analysis. Why do these estimates differ from the actual stock price of (COST)?