Question
How do I go about this? Explore finance.yahoo.com to find and quote the following given data: i) Within CAT's Statistics ===>Dividends, what is its amount
How do I go about this? Explore finance.yahoo.com to find and quote the following given data:
i) Within CAT's "Statistics" ===>"Dividends", what is its amount of "Trailing Annual Dividend Rate"? This amount is for the dividend actually paid (i.e., without any prediction) during the past 12 months up to today, thus it should be used to measure the most-current-year dividend, D0, in the dividend growth model DGM formula.
ii) Within CAT's "Analysis"==>"Growth Estimates", what is its CAT's "Next 5-year per annum" amount? This shall be used as the long-term future growth rate, g , in the dividend growth model formula. Use these web-provided data in a) and b) as inputs, and do the following calculations.
Question B1: Assume that the market expects the CAT long-term stock return is given as R = 5.00% per year based on its risk. Use the dividend growth model (DGM) formula to compute CAT stock's fair price P0. Is your calculated fair price P0 answer positive or negative? Just in case you may calculate "fair price < 0" (in algebra), does it make sense to you?
Question B2: Let's assume that today's most-current-day "at close" stock price (see CAT's "Summary") is fair, then use this observed price as P0 in the DGM formula. But the long-term required (expected) stock return R is not yet given, you can try to figure it out. With these web findings of P0, D0 and g amounts being used as inputs to solve the DGM equation, what shall be CAT stock's corresponding fair-market required return, R?
Question B3: Let's look at how those practitioners (e.g., Wall Street analysts) think of the potential of CAT stock. Via CAT's "Summary", find and compare the actual "at-close" price amount as of today with the "1y Target est" price amount. Are Wall Street analysts claiming that the CAT stock price still has considerable room to rise within the forthcoming year?
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