I have the caterpillar inc stock

Guidelines for Stock Valuation! Second Midterm Assiment All students are being assigned an individual company to prepare a stock valuation model, which is to be based on material covered in Chapters 18, 7 and 20. I will only allow one stock valuation model for each company (no two students can prepare a model of the same company) so it is important that you contact me if you decide to change your assigned company. -As previously announced, I have expanded this assignment to include material that otherwise would be on the second midterm exam, which is now a part of this assignment. The additional questions can be found on the following pages. -The assignment requires a copy of the latest annual report ( 1 0-K) of your assigned company. You will need to use the nancial statements portion to complete the assignment, which can be obtained through several sources. Some major sources include: 1) The company's Investor Relations Department. 2) A business library, such as the Baruch College Library or the Business and Science Library in New York City. 3) The company's web site, where a copy can usually be downloaded directly. 4) A web site that accesses EDGAR, the SEC's corporate ling center. This can be accessed from Yahoo (under the company's prole) or through sites such as Free EDGAR (www.freeedgar.com) and EDGAR Online (www.cdgar-online.com). S) An annual report service, which is provided by major nancial information companies such as Dow Jones. -A pro forma Income Statement must be prepared in MS Excel, using a minimum projection of three years, as based on pro forma projections discussed in Chapter 18. You need to include the most recent income statement for your company that is part of the lO-K. This information can then be used to calculate the fair value of the company's stock price, as based on the stock valuation formulas discussed in Chapters 7 and 20. All assumptions and formulas used for the pro forma projections and the company's fair value must be included at the end of your model. Once a fair value is reached, this can be compared to a recent quote of the company's stock price to determine whether or not the company is fairly valued at its most recent trading price. A separate attachment provides an example of how this should be constructed. The required return is 10% The value of this company is calculated as PO = D1 / (1 + r) + D2 / (1 + r)^2 + D3 / (1 +r) ^3 +P3 / (1 + r) ^3 Where P3 = D3 / r - g Using the Projections from XYZ Corporation's Earnings Model, PO = $2.52 / (1+0.10) + $2.90 / (1+0.10) ^2 + $3.34 / (1.10)^3 + $36.70 / (1.10) ^3 Where P3 = $3.34 / 0.20 - 0.10 PO = $2.29 + $2.40 + $2.51 + $27.57 PO = $34.77 More -Once an estimated value is established, there are three possible v scenarios when it is compared to a recent quote, as follows: Earnings Model Value XYZ Most Recent Quote (Three Scenarios) PO = $34.77 Secenario 1) $25, Undervalued PO = $34.77 Secenario 2) $50, Overvalued PO = $34.77 Secenario 3) $35, Fairly ValuedXYZ Corporation Earnings Model Income & Pro Forma Income Statements 12/31/19 and PF 12/31/20 to 12/31/22 (Values in Millions of Dollars) 2019 2019CS 2020PF 2021PF 2022PF Sales $2,500 100.0% $2,875 $3,306 $3,802 Cost of Goods Sold ($750) 30.0% ($863) ($992) ($1, 141) Depreciation ($250) 10.0% ($288) ($331) ($380) EBIT $1,500 60.0% $1,725 $1,984 $2,281 Interest ($150) 6.0% ($173) ($198) ($228) Income Before Taxes $1,350 54.0% $1,553 $1,785 $2,053 Taxes, 35% ($473) 18.9% ($543) ($625) ($719) Net Income $878 35.1% $1,009 $1,160 $1,335 Dividends ($219) 25.0%* ($252) ($290) ($334) Retained Earnings $658 75.0%* $757 $870 $1,001 Dividends Per Share (DPS) $2.19 $2.52 $2.90 $3.34 *-Dividends and RE are calculated as a percentage of Net Income. Earnings Model Projections and Assumptions: -Pro forma sales growth is 15% per year -Common Size values are calculated as a percentage of sales, unless noted otherwise -DPS is calculated as Dividends / 100 Million Shares Outstanding -Dividends are expected to grow at a constant rate of 20% after pf2022 -The required return is 10% -The value of this company is calculated as PO = D1 / (1 + r) + D2 / (1 + r)^2 + D3 / (1 + r) 13 +P3 / (1 + r) ^3 Where P3 = D3 / r - gA) Beginning Balance B) Payment per Period C) Interest Paid D) Principal Paid E) Ending Balance 4) Please solve for the value of the following stocks and briey explain your results: A) Your research on Skyway Corp. indicates that the company will be paying dividends of $1.75 per share in 2021, $1.95 per share in 2022, $2.25 per share in 2023 and $2.65 per share in 2024. You are given an estimate that the stock price in 2024 will be worth $37.50 per share. If your required annual return for all investments is 12%, what is the most you are willing to pay for Skyway stock today? B) Meltran, Inc. has issued a series of preferred stock that is priced at $80 per share and has a quarterly dividend payable at $0.75 per share. What is the dividend yield of this preferred stock? C) Tenomar Corp. is about to experience a 5 year restructuring plan and will not pay dividends during that time. However, management promises that this initiative will be so successful that the company can then pay out a $6.75 per share dividend that will then grow at a rate of 10% per year. What is the maximum price you are willing to pay for Tenomar's stock if your required annual return is 15%? D) Gibralter, Inc. has just announced EPS of $3.75 and future earnings are expected to grow 20% per year for the foreseeable future. The most recent stock quote for Gibralter indicates that the company is trading at $48.50 as a result of this announcement. What is the PEG for Gibralter and would the stock of this company be worth buying at these levels as the result of your PEG analysis? -The assignment must be handed in by Monday, November 30th and will count for a total of 25% of your overall grade. Feel free to leave a message for me in the Economics Department office or to e-mail me at david.debora@gc.cuny.edu if you have any questions about the assignment. Additional Questions for This Expanded Assignment: 1) Please solve for the question marks (round to the nearest whole number where applicable): P.V. Years Interest Rate Compounding F.V. A) 2 5 14% Monthly $3,725.0 B) $235.00 2 2 semiannual $935.00 C) $6,250.00 8 5 3/4% Simple 2 D) $3,750.00 2 3 10% Annual $8,315.00 E) $1,075.00 3 19% Weekly 2 F) Explain the differences between simple and compounded interest rates in light of the results you attained. 2) Please solve for the value of the following bonds and briey explain your results: A) A US. Government Treasury Strip is quoted in the Wall Street Journal at a market price of 87:19 (87 and 19/32) If the strip is scheduled to mature in November 2025, what is the annual interest rate for this bond? B) Xenor Corporation introduced a bond in 2001 that offered a coupon rate of 3 \"2%, resulting in coupon payments of $8-50. The bond is scheduled to mature in 2030. If the current going interest rate in the market is 6 3/4%, what is the market price (please calculate the interest and the principal due to get this value) of this bond today? What is the bond selling for in the market relative to its initial value at the time the bond was introduced and what is the common term used to describe a bond that is selling at this price? C) A bond offers a coupon that makes annual payments of $87.50. The bond was originally set to mature in 17 years. A quote for this bond, obtained 15 years after the original issue date, listed the market price as $1,070.00. What is the YTM for this bond? 3) Construct a detailed Fixed Loan Amortization schedule for a 2 year corporate equipment loan of $750,000.00, payable at a 7 1/2% annual interest rate, with payments scheduled to be made on a quarterly basis. This loan calls for the payback of $93,750.00 toward the principal with each scheduled payment. Note that the schedule may be off by several dollars due to rounding. The schedule should include the following parts, which you should put in the form of a table