Your boss gives you a task to calculate the intrinsic value of Skywest, Inc. You are told that Value Line Investment Survey is a good resource for equity valuation.

Here are the hints assisting you to finish the job.

1. Find ValueLine report under database on SDSU library website. https://library.sdsu.edu/offcampus/login.php?url=https%3a%2f%2fresearch.valueline.com%2fsecure%2fd ashboard Then under Browse Search search the company name skywest and downlad the most recent PDF report (1 page).

2. What is the market price of Skyweat on the report? [1 point]

3. Use the CAPM model to calculate the required return for Skywest with the beta given in the report. Assume risk free rate is 0.5% and market risk premium is 10%. [1 points]

3. You can assume now is the end of 2018. All dividends are paid at the end of each year (2018 dividend has just been paid). Please calculate the intrinsic value as of 12/31/2018. Forecast future dividend payments: Value Line will provide you with forecasted dividends for 2019 and 2021-2023; treat these two numbers as the starting and ending points, and use linear interpolation method (assuming equal changing amounts between periods) to forecast the dividends between the two time points. Clearly state your assumptions and show your work. [2 points]

4. Assume after the last forecasted dividend, the dividend will grow at a constant rate. Based on the information on the report, what is the constant growth rate then? [1 point]

5. Use the DDM model to calculate the intrinsic value of Skywest and make your recommendation. [3 points]

6. Write down anything you want to add in your final report submitted to your boss. [2 points]