Question: 1. Compute a constant and abnormal growth model for the DDM, compute today's perceived value for the following three stocks: LMT, NOC, and GD. Also,

1. Compute a constant and abnormal growth model for the DDM, compute today's perceived value for the following three stocks: LMT, NOC, and GD. Also, use the relative value P/EPS, P/SPS, and P/CFPS models to compute a 12-month forward price. . . PO with DDM and constant growth PO with DDM and 2-stage growth P1 with historical P/EPS, P/CFPS and P/SPS (5 year average) and forecasted EPS1, SPS1, and CFPS1 (EPSO/CFPSO/SPSO being equal to last 4 quarters on Value Line; price being accessed on finance.yahoo.com at end of the most recent quarter (per Valueline). Assume the following: Ris derived probability-based R1000 for past 15 years, assuming a good economy where GPD growth >3%, a normal economy where GPD growth 1.5%-3%, and a poor economy is where GPD growth 3%, a normal economy where GPD growth 1.5%-3%, and a poor economy is where GPD growth
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
