My selected company for this assignment is Walmart. Walmart is a publicly-traded company incorporated in the United States. Walmart's last traded stock price is $ 134.37

The current dividend yield of Walmart is 1.54%

The Ke assuming growth of 5% is 6.54%

The past twelve months of PE ratio for Walmart is 32.54

The dividend yield is 1.54%, Ke is 6.54%, and PE ratio is 32.54

There is an inverse relationship between Ke and PE. Higher Ke leads to lower PE and Vice versa, and since investors demand higher Ke for risky companies, the cash flows of such companies will be unpredictable and uncertain.

For Walmart, when Ke declines from 6.54% to 5%, PE multiple increases from 32.47x to 50x, and when Ke increases from 6.54% to 7%, PE multiple decreases from 32.47x to 25x.

The price of Walmart will increase if the growth rate increases from 5%. We can calculate this from the GGM. When the growth rate increases from 5% to 5.5%, the price of stock increases from $147.27 to $219.11

PE ratio comparison indicates that Costco Wholesale Corp. is valued at a higher multiple than Target Corp and Walmart Inc, and Target Corp is valued at a significantly lower multiple than Walmart Inc and Costco Wholesale Corp.

Since there is an inverse relationship between Ke and PE multiple, Costco Wholesale group will have the lowest Ke because it is trading at the highest PE multiple.

There is a direct Relationship between Growth rate and stock price. For example, a higher growth rate leads to a higher stock price. There is a negative relationship between stock price and Ke. Higher Ke leads to discounting at a higher rate and lower the stock value. Lower Ke leads to discounting future cash flows at the lower rate and increases the value of the stock.

calculation is off with this