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Using no more than a paragraph, from a macro perspective (do not worry about this individual company, think of the market as a whole), describe
Using no more than a paragraph, from a macro perspective (do not worry about this individual company, think of the market as a whole), describe how the analysis below shows the classic trade-off between growth versus inflation (as reflected by higher rates) in valuing equities. risk free rate = 3% , growth rate = 4% , intrinsic stock price = 52.92$
Growth rate | ||||||||||||
$52.92 | 2% | 2.50% | 3% | 3.50% | 4% | 4.50% | 5% | 5.50% | 6% | |||
1% | 46.89225 | 53.52906574 | 61.76077519 | 72.240793 | 86.0359184 | 105.01467 | 132.77463 | 177.244466 | 260.00778 | |||
1.50% | 42.62469565 | 48.31178344 | 55.24480565 | 63.8835714 | 74.9458824 | 89.618 | 110.01132 | 140.282656 | 189.90268 | |||
2% | 38.93383784 | 43.8640118 | 49.78662338 | 57.0348736 | 66.1099187 | 77.801953 | 93.433696 | 115.399869 | 148.52918 | |||
2.50% | 35.71017722 | 40.0271978 | 45.14798799 | 51.3200662 | 58.9042066 | 68.447583 | 80.82201 | 97.5066292 | 121.2283 | |||
Risk free rate | 3% | 32.87028571 | 36.68354756 | 41.1572067 | 46.4790826 | 52.9156757 | 60.858189 | 70.905128 | 84.0205911 | 101.86372 | ||
3.50% | 30.34948315 | 33.74371981 | 37.68741514 | 42.3257386 | 47.8599377 | 54.57731 | 62.902703 | 73.4920175 | 87.41401 | |||
4% | 28.09685106 | 31.13872437 | 34.64284314 | 38.7232361 | 43.5347977 | 49.293397 | 56.309155 | 65.0441897 | 76.218739 | |||
4.50% | 26.07175758 | 28.81443966 | 31.94983834 | 35.568806 | 39.7925606 | 44.786529 | 50.782524 | 58.1157554 | 67.289717 | |||
5% | 24.24138462 | 26.72781186 | 29.55082969 | 32.7837471 | 36.5228283 | 40.897041 | 46.083234 | 52.3306271 | 60.002059 |
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