Question
-You're a financial advisor and one of your clients comes to you for advice. He wants to invest in company XYZ. What would be your
-You're a financial advisor and one of your clients comes to you for advice. He wants
to invest in company XYZ. What would be your first steps in order to help your
client?
-After taking those required steps you investigate the financial data, finding out that
the current stock price is $180.00.
- The company has grown at an average of 3% for
the past 10 years.
-The current rate of inflation is 2% and the current 30-year bond
yield 9risk free rate) is 2%.
-The most recent information from the 2017 statement of
cash flows, indicates a $1.5 billion in capital expenditures, $4.8 billion in cash from
operating activities and $990 million from investing activities, $300 Million in
Dividends and there are 650 million shares outstanding.
- Using the DCF valuation method, produce an excel sheet, what would you recommend to your client and why?
-Is it worth investing?
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