Question
The company I am using for this project is UPS and I need help to complete this part of the project. Quantitative Research (Before vs.
The company I am using for this project is UPS and I need help to complete this part of the project.
Quantitative Research (Before vs. After COVID-19 crisis): A: Estimate the value of your firm using three valuation methods (DDM, PE and DCF) before the COVID-19 shock (As of January 2020). B: Estimate the value of your firm using three valuation methods (DDM, PE and DCF) after the COVID-19 shock (As of April 2020). (Hint for DDM: Has the firm announced any changes to the forthcoming dividends?) ***Before choosing a firm, please make sure that the company is profitable (is having positive earnings) and that it has paid dividends for at least three years. ***If you are working on the project by yourself, you can dismiss the DDM and PE valuation models. The value loss or creation is simply the difference between A and B for each model. Please answer the question: In your opinion, which valuation method captured the value loss/gain more precisely and why do you think this is the case? You should submit your quantitative research in an Excel Workbook. All calculations should be made by formulas. Any number plugged-in manually will be ignored for grading purposes. Your assumptions, of course, are the result of your qualitative research. Although these values may be plugged directly (there is no formula), you should describe how you chose the x or y value as your assumption in the qualitative portion.
For calculation of Beta, your historical observation period will be 2017 2019 (3-Year Period). Use monthly returns. Remember that the discount rate used in the DDM method is the Expected Return estimated from the Capital Asset Pricing Model. It is understood that an accurate estimation of a firms value loss or gain due to COVID-19 is a laborious and complex process which requires data that is not in your reach or possibly not yet available. Attempting to do so is out of the reach of this project. Notwithstanding, you should be ok implementing the basic form of DDM, PE and DCF models as learned in this class. If you face any challenges or limitations, please reach out to your instructor. You will not be graded by the accuracy of your valuation, data, inputs or output, but rather by correctly implementing the models learned in class.
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