For the Company UPS please find the following -

1) What is the current Dividend per Share?

2) What is the number of shares outstanding?

3) What is FCFE (Free Cash Flow to Equity) amount for the trailing twelve months (TTM)?

4) Calculate FCFE per Share

5) What is the beta of the stock?

6) Calculate the 5-year beta using the monthly data (120 months) in the spreadsheet. It should be close to the beta from Yahoo Finance (Question 5).

7) Calculate the equity discount rate, using the beta, an expected equity market return of 9%, and a risk-free rate of 3.0%.

8) Assume a Dividend per Share growth rate of 5% and the beta from question 7. Calculate the intrinsic value using the single stage dividend discount model (the Gordon Growth model)

9) Assume a FCFE per Share growth rate of 7% and the equity discount rate from question 7. Calculate the intrinsic value using the single stage FCFE discounted cash flow model.

10) Assume a FCFE per Share growth rate of 8% and the equity discount rate from question . Calculate the intrinsic value using the single stage FCFE discounted cash flow model.

11) Assume a FCFE per Share growth rate of 7%. Reduce the equity discount rate from question 7 by 1%. Calculate the intrinsic value using the single stage FCFE discounted cash flow model.

12) Compare the answers (the intrinsic values) for questions 10 and 11. What did you notice? What did you learn?

13) Assume a FCFE per Share growth rate of 20% for each of the first 5 years and a FCFE per Share growth rate of 6.5% after 5 years. Assume the equity discount rate from question 7 applies to both periods Calculate the intrinsic value using the two stage FCFE discounted cash flow model.

14) What is the current price of the stock?

Answer rating: 100% (QA)

1 The current dividend per share for UPS is 1625 2 The number of shares outstanding for UPS is 85314 ... View the full answer