Calculate the Valuation of a company (except for banking and non-banking financial firms) of your choice using a two-stage growth FCFF model preferably listed on the National Stock Exchange (NSE). The forecast period will include a high growth phase of five years followed by a stable phase. All the assumptions for the questions should be presented into a word file along with appropriate analysis of the results. The calculation would be done on the excel sheet. The minimum word limit is 800 words and there is no upper word limit for the question. Take necessary assumptions as required but specify them clearly into the word file.

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You are planning to invest in two stocks and a risk free asset. You are sure that economy is expected to behave according to the following table. Likelihood of each scenario is given next to the state of economy. You are planning to invest where you put a quarter of your money in stock A and half of your money stock B and a quarter of your money in the risk free assets. You also know the following information. State of the Economy Recession Normal Boom 13.549% as annual interest rate Probability 25% 40% 35% Return on Stock A/RA -5% 13% 27% Return on Stock B/RB 12% 5% -12% Return on Risk Free Assets/RF *% *% *% a) Calculate the total risk (standard deviation) for Stock A, Stock B and the risk free assets. (5 points) b) Calculate the expected return for your portfolio. (5 points) c) What is the total risk of this portfolio? (5 points) d) Calculate the risk retum trade off of each stock alternative and portfolio. Which one is best investment idea and why? (5 points) You are planning to invest in two stocks and a risk free asset. You are sure that economy is expected to behave according to the following table. Likelihood of each scenario is given next to the state of economy. You are planning to invest where you put a quarter of your money in stock A and half of your money stock B and a quarter of your money in the risk free assets. You also know the following information. State of the Economy Recession Normal Boom 13.549% as annual interest rate Probability 25% 40% 35% Return on Stock A/RA -5% 13% 27% Return on Stock B/RB 12% 5% -12% Return on Risk Free Assets/RF *% *% *% a) Calculate the total risk (standard deviation) for Stock A, Stock B and the risk free assets. (5 points) b) Calculate the expected return for your portfolio. (5 points) c) What is the total risk of this portfolio? (5 points) d) Calculate the risk retum trade off of each stock alternative and portfolio. Which one is best investment idea and why? (5 points)

Answer rating: 100% (QA)

Introduction In this project we will be using a twostage growth FCFF model to calculate the valuation of a company of our choice that is listed on the National Stock Exchange NSE The company we have c... View the full answer