I need help estimating the Starbucks'stock price using the dividend-discount model: Using an investment source and finding:

1) the current dividend;

2) analyst's estimate growth rate for the next five to ten years;

3) an alternative growth estimate using the firm's historical growth rate or the formula "g=ROE x b".

Using the estimate of the cost of equity in the WACC for the rE part of the formula: I need help combining the above information into the dividend-discount model (DDM).

I also need help comparing result to the current market price of your firm's stock. I need help analyizng and an explanation of how they compare and explain any differences observed.

Some notes that help solve this

For 1 :Note that you are being asked to provide your company's intrinsic stock price using two different equations. Note that to compute the stock price you first have to find the anticipated dividend your company will pay next year. For this method, you will have to use the cost of equity from WACC calculations.

After you have calculated the stock price, the problem asks you to calculate the stock price using an alternative growth estimate, such as the one cited (g=ROE x b.) If you use this method, here's a hint, 'b' does not stand for beta. I'll let you research that equation on your own. Alternatively, you can use a different equation such as the discounted free cash flow model though there are more steps to that equation.

For 2: Your end result in this part is that you will have two derived stock prices from the two different equations. Some of you will actually come up with a negative intrinsic value, but that may not necessarily mean that you calculated incorrectly. Sometimes it is the tool, not the carpenter, that is to blame.

Remember to show and explain all of your calculations.

For 3: For this third part, and before you provide an answer, you will be well served by researching the pros and cons of using dividend models to calculate stock prices. You will likely find some good reasons why the actual stock price is not the same as your calculated prices.