Apple Inc.

Part V: Stock Valuation

In chapter 9, we learned how the dividend-discount model can be used to determine the value of a firm's equity, or the current price of a share of stock. Use this model to estimate the value of a share of your firm's stock and compare this estimate to the current market value. To do it, you will need to do the following:

Estimate the firm's stock price using the dividend-discount model: Use an investment source (some have been provided in the Content area) and find: 1) the current dividend; 2) analyst's estimate growth rate for the next five to ten years; 3) an alternative growth estimate using the firm's historical growth rate or the formula "g=ROE x b".

Use your estimate of the cost of equity in the WACC for the rE part of your formula: Combine the above information into the dividend-discount model (DDM).

Compare your result to the current market price of your firm's stock. Provide analysis and an explanation of how they compare and explain any differences you observe.

Some data I collected

Growth estimate Next 5 Years 17.93%

Current year growth estimate 58.20%

Risk Free rate 1.45

EPS 1.68

Dividends per share (TTM) 0.88

Retention ratio 47.62%

ROE 0.88

g 41.84%