Stock Valuation

Select a company from the stock market, Try to select a stock from a big recognized company, maybe that is part in the S&P 500. Try to get information from Yahoo Finance, or Reuters to estimate the value of the company using the Dividend Discount Model.

1. You need an estimate of the next dividend, the cost of equity, and the growth rate. The company you select should pay dividends currently.
2. Use the CAPM to estimate the cost of equity, using a market risk premium of 5.5 percent, a risk-free rate about 3 percent and the beta from the stock.
3. Once you have the value (let us know), compare that value to the current price of the stock.

What do you think about the disparity, if any? What do you think are the main drivers of value in your company? What do you think are the most difficult variables to estimate in order to value the company more accurately? Use the corporate valuation model to help answering these questions.