Question
Each step should be on a separate tab or column within the spreadsheet, clearly labeled. 1. Create a dividend discount model to value each stock.
Each step should be on a separate tab or column within the spreadsheet, clearly labeled. 1. Create a dividend discount model to value each stock. 2. Calculate the P/E ratio and the dividend yield for each stock. 3. Rank each stock by expected return, highest to lowest. 4. Rank each stock by expected alpha by comparing the calculated return to the required rate of return. Indicate buy or sell next to each stock, depending on the return derived from your valuation model vs. the required rate of return. 5. Create a 10-stock equally weighted portfolio with the stocks with the highest expected alpha. Show the beta, expected return and Jensen alpha for this portfolio.
| Risk Free Rate | 2.00% | ||||||||||||
| Market Expected Rtn | 7.00% | ||||||||||||
| EARNINGS PER SHARE | DIVIDEND PER SHARE | ||||||||||||
| Stock Name | Last Price | Beta | Actual | Estimated | Estimated | Estimated | Actual | Estimated | Estimated | Estimated | Constant Growth after 2024 | ||
| 2021 | 2022 | 2023 | 2024 | 2021 | 2022 | 2023 | 2024 | ||||||
| CharityGlobe | $136.35 | 1.11 | $13.64 | $16.18 | $19.49 | $21.83 | $ 6.87 | $ 8.15 | $ 9.82 | $ 11.00 | 2.68% | ||
| Worldwidesigns | $167.60 | 1.07 | $20.95 | $23.74 | $28.05 | $32.23 | $ 8.97 | $ 10.16 | $ 12.00 | $ 13.80 | 3.15% | ||
| Laguild | $174.27 | 1.31 | $11.62 | $14.88 | $17.40 | $20.58 | $ 6.65 | $ 8.51 | $ 9.95 | $ 11.77 | 4.03% | ||
| Edconception | $177.55 | 1.30 | $11.84 | $13.48 | $17.08 | $19.97 | $ 3.41 | $ 3.88 | $ 4.92 | $ 5.75 | 4.70% | ||
| Recorps | $96.05 | 0.93 | $6.00 | $7.00 | $7.83 | $9.36 | $ 3.24 | $ 3.78 | $ 4.23 | $ 5.05 | 4.76% | ||
| Cocompany | $123.00 | 0.68 | $11.18 | $11.87 | $13.43 | $14.93 | $ 5.28 | $ 5.60 | $ 6.34 | $ 7.05 | 4.48% | ||
| Companiesia | $195.52 | 1.04 | $17.77 | $20.46 | $22.25 | $24.23 | $ 9.24 | $ 10.64 | $ 11.57 | $ 12.60 | 4.11% | ||
| Innovationsy | $151.74 | 1.03 | $10.12 | $11.79 | $12.99 | $15.82 | $ 3.28 | $ 3.82 | $ 4.21 | $ 5.13 | 2.43% | ||
| Procorp | $115.55 | 1.27 | $11.56 | $14.79 | $16.23 | $18.21 | $ 3.37 | $ 4.32 | $ 4.74 | $ 5.32 | 3.80% | ||
| Macroby | $135.44 | 1.41 | $15.05 | $19.03 | $22.65 | $25.48 | $ 4.57 | $ 5.78 | $ 6.89 | $ 7.74 | 3.08% | ||
| Corpify | $211.38 | 1.12 | $16.26 | $18.09 | $20.58 | $25.42 | $ 3.97 | $ 4.41 | $ 5.02 | $ 6.20 | 3.52% | ||
| Sacompanies | $10.29 | 1.46 | $0.86 | $1.07 | $1.34 | $1.56 | $ 0.41 | $ 0.51 | $ 0.64 | $ 0.74 | 4.95% | ||
| Instrion | $25.93 | 1.32 | $1.30 | $1.66 | $2.08 | $2.54 | $ 0.69 | $ 0.89 | $ 1.10 | $ 1.35 | 4.48% | ||
| Companypro | $136.67 | 0.88 | $11.39 | $12.32 | $14.29 | $15.74 | $ 2.82 | $ 3.06 | $ 3.54 | $ 3.90 | 2.08% | ||
| Globality | $162.88 | 0.64 | $9.05 | $10.16 | $10.83 | $11.60 | $ 5.21 | $ 5.85 | $ 6.24 | $ 6.68 | 4.12% | ||
| Corlds | $193.14 | 1.01 | $13.80 | $16.55 | $19.29 | $21.16 | $ 7.62 | $ 9.14 | $ 10.65 | $ 11.68 | 2.21% | ||
| Trademax | $96.87 | 1.35 | $8.81 | $11.04 | $14.37 | $16.95 | $ 4.26 | $ 5.34 | $ 6.95 | $ 8.21 | 2.02% | ||
| Incable | $163.71 | 1.49 | $8.19 | $9.69 | $10.88 | $12.19 | $ 2.72 | $ 3.22 | $ 3.61 | $ 4.05 | 4.30% | ||
| Edenterprise | $65.25 | 0.61 | $4.08 | $4.26 | $4.83 | $5.44 | $ 1.24 | $ 1.30 | $ 1.47 | $ 1.66 | 3.35% | ||
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