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Question 3 Technology companies earn billions by capitalizing on their platforms and growing user databases. For example, Apple derives more than half of its revenue
Question Technology companies earn billions by capitalizing on their platforms and growing user databases. For example, Apple derives more than half of its revenue from iPhone sales while Microsoft generates almost a third of its total revenue from Azure cloud services. Meta formerly Facebook and Alphabet Google however, follow a different approach by making most of their money by selling their audience's attention. Not only that, the growing demand for Al applications and hardwares have also made technology companies achieve significant profitability. The societal changes triggered by COVID also drove demand for their products and services. Therefore, you want to investigate the performance of US technology companies, which are their stock symbols NASDAQ in parentheses: Microsoft Corporation MSFT Apple Inc. AAPL NVIDIA Corporation NVDA Alphabet Inc. GOOGL Meta Platforms, Inc. META By using Yahoo Finance website finance.yahoo.com: Risk and Return Obtain monthly historical data prices for the companies by entering the start date as April and end date as April Download the data and use only the date and adjusted close prices from the data. Convert the data prices to monthly returns. Compute the running average and standard deviations for the monthly returns for each stock. Compute the running average for returns and standard deviations across stocks for each month equally weighted portfolio of these stocks Using these statistics, create a plot with standard deviations on the horizontal axis and average return on the vertical axis. Explain the returns and standard deviations volatility over time and between single stock and portfolio. Cost of Capital Obtain financial statements income statement and balance sheet for the past three years for every company click Financials Determine the cost of debt for every company interest expensetotal debt for every year. Determine the cost of common stock equity by using CAPM use NASDAQ NDX current return as expected market return and the interest rate on a threemonth US Treasury bill Tbill as riskfree rate Determine the proportion of longterm debt longterm debttotal capitalization Determine the proportion of common stock equity common stock equitytotal capitalization Explain and compare the cost of debt, the cost of common stock equity, the proportion of longterm debt and the proportion of common stock equity between the companies. Capital Budgeting Obtain cash flow statement for every company click Financials Determine which company is the most profitable if it was bought in early for $ billion, based only on free cash flows. Use the cost of debt that you have calculated before as your required return NPV Calculate IRR based on the information in the previous question. As a conclusion, explain which company you would invest only one company based on your findings in all previous questions.help
Question
Technology companies earn billions by capitalizing on their platforms and growing user
databases. For example, Apple derives more than half of its revenue from iPhone sales
while Microsoft generates almost a third of its total revenue from Azure cloud services. Meta
formerly Facebook and Alphabet Google however, follow a different approach by making
most of their money by selling their audience's attention. Not only that, the growing demand
for Al applications and hardwares have also made technology companies achieve
significant profitability. The societal changes triggered by COVID also drove demand for
their products and services. Therefore, you want to investigate the performance of US
technology companies, which are their stock symbols NASDAQ in parentheses:
Microsoft Corporation MSFT
Apple Inc. AAPL
NVIDIA Corporation NVDA
Alphabet Inc. GOOGL
Meta Platforms, Inc. META
By using Yahoo Finance website
finance.yahoo.com:
Risk and Return
Obtain monthly historical data prices for the companies by entering the start date as
April and end date as April Download the data and use only the date and
adjusted close prices from the data.
Convert the data prices to monthly returns. Compute the running average and standard
deviations for the monthly returns for each stock. Compute the running average for returns
and standard deviations across stocks for each month equally weighted portfolio of these
stocks
Using these statistics, create a plot with standard deviations on the horizontal axis and
average return on the vertical axis. Explain the returns and standard deviations volatility
over time and between single stock and portfolio.
Cost of Capital
Obtain financial statements income statement and balance sheet for the past three years
for every company click Financials
Determine the cost of debt for every company interest expensetotal debt for every year.
Determine the cost of common stock equity by using CAPM use NASDAQ NDX
current return as expected market return and the interest rate on a threemonth US
Treasury bill Tbill as riskfree rate
Determine the proportion of longterm debt longterm debttotal capitalization
Determine the proportion of common stock equity common stock equitytotal
capitalization
Explain and compare the cost of debt, the cost of common stock equity, the proportion of
longterm debt and the proportion of common stock equity between the companies.
Capital Budgeting
Obtain cash flow statement for every company click Financials
Determine which company is the most profitable if it was bought in early for $
billion, based only on free cash flows. Use the cost of debt that you have calculated before
as your required return NPV
Calculate IRR based on the information in the previous question.
As a conclusion, explain which company you would invest only one company based on
your findings in all previous questions.help
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