Given the following information for Exxon Mobil and Chevron Corporation: XOM CVX Expected growth -4.90% -10.80% Expected ROE 29.90% 23.20% Expected profit margin 11.00% 13.70% Potential payout ratio 65.70% 65.50% Beta 0.750 0.740 10-year Treasury Rate 3.51% 3.51% Expected Return on the Market 9.30% 9.30% Calculate for both companies: 1. Forward Price to Earnings Multiple 2. Trailing Price to Book Multiple 3. Forward Price to Sales Multiple 4. Given the following actual multiples: XOM Forward P/E 10.70 Trailing P/B 2.20 Forward P/S 1.20 CVX Forward P/E 11.90 Trailing P/B 2.30 Forward P/S 1.50 Do Exxon and Chevron seem correctly/over/undervalued? Use the following information to estimate the value of the S&P 500: The most recent Earnings per Share: $377 Earnings Growth Rate: 4.75% 10-year U.S. Treasury Bond Rate: 3.51% Equity Market Risk Premium: 5.79% Return on Equity: 9.00% 5. What is the Cost of Equity? 6. What is the expected dividend next year? 7. Based on our fundamental calculations, what should the value of the S&P be? 8. If the S&P 500 is trading at 4,000, is it correctly/over/undervalued?