Rf = 0.5% and market premium = 8%, long term historical Mkt return = 12%

1. Apple and high-tech stock valuation (40 points):

• Current price around $160 (Nov); the 52-week price range from 112 (March 2020) 161; over the past year Apple reached a peak price around 145 in early January 2021.
• Beta 1.21; EPS 5.61 and PE around 28; with $.88 dividends per share
• Analyst EPS range from 3.74 to 5.50, with an average of 4.47
• Revenue of $365B for 2021 and $274B for 2020; 94B profits for 2020-21 with 17.3 B shares outstanding and Market Capitalization of 2.6 Trillion
• Competitor PEs from 25 to 45; some much larger such as Microsoft, IBM, Google
• Total assets $351 B and $62 B in cash

Shares held by no major inside owners; 60% by institutions

QUESTION: What Price next year 2022, What Expected Return and would you invest?

Please show how you arrive at expected returns and price using at least Two methods that we discussed in class. (dividend discount, comparables (PE), base + PVGO, and CAPM). Make sure that you show base value and PVGO based on your assumptions.