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

1. Estimate the firms 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) analysts estimate growth rate for the next five to ten years; 3) an alternative growth estimate using the firms historical growth rate or the formula g=ROE x b.
2. 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).
3. Compare your result to the current market price of your firms stock. Provide analysis and an explanation of how they compare and explain any differences you observe.