Emerson Electric was founded in 1890 in St. Louis, Missouri, as a manufacturer of electric motors and fans. Over the past 100-plus years, Emerson has grown from a regional manufacturer into a global technology solutions powerhouse.For more information, please visit theEmerson Electric website.Emerson Electric is a publicly own company and its stock is traded formally. In this exercise, we try to value Emerson's stock.

Go toThomson Reuters, a prominent financial information site.Click on Markets, then Stocks, and in the search box enter Emerson Electric. Click enter, and you will see the name on the answer list provided by the search box. Click on the name to obtain the information on Emerson. [It has come to my attention that the site is not always working as it should. If this is the case, please click on the link to arrive the relevant page:http://www.reuters.com/finance/stocks/overview?symbol=EMR.N]

1. Please answer the followings with the help of information provided by Reuters:

• What is the current price of Emerson's stock, please include the date and time with your answer?
• What are the values of 52-week high and 52 week low, and the meaning of these statistics?
• What are the market capitalization value and its meaning?
• How many shares of Emerson's stock are outstanding?
• If we divide the market capitalization by the shares outstanding, what do we obtain?Explain.

1. Is Emerson a dividend-paying company? If yes, what is the amount appearing in Reuters? Remember that dividends are "quarterly" and to make more sense out of the figure we need to compute the annual dividend. Therefore, compute the annual dividend and divide it by the market price to see the dividend yield in the annual percentage. Is it the same as posted?
2. Click on the Financials tab and explain the dividend performance of Emerson's comparing the industry and the sector. (Please define industry and sector as part of your answer.)
3. Assume that the market risk premium now is 6% and the risk-free return is 1%. Using this given information and Emerson's beta as published by Reuters, please use the CAPM and compute the required rate of return for Emerson. (Please note that you are given the market-risk premium here, not the market return! Please explain the meaning of beta, and the required rate of return as part of your answer.)
4. Assuming a constant growth rate model and using the 3-year dividend growth rate (provided by Reuters - Keymetrics - Growth) please compute the expected stock price for Emerson. Write down the formula you are using and explain your answer briefly. In the light of what you found, can we say that Emerson's stock price is fair?
5. Assume that the unanticipated inflation caused the security-market line to shift upwards 1 percentage point. Will you modify your answer in (5) above? Explain.
6. If market risk premium increases 1 percent, will you modify your answer in (5) above? Explain.