Using 2022 Prices as Current and 2023 as Projected

Beta is 1.2

1. What would be the required return for Goldman Sachs stock using the 10-year U.S. Treasury Note for the risk-free rate, the beta for Goldman Sachs as found in the Value Line Survey, and the equity risk premium using the following Ibbotson Data: Series: Average Annual Return Standard Deviation Large-company stocks 11.9% 19.8% Small-company stocks 16.2% 31.6% Long-term corporate bonds 6.3% 8.4% Long-term government 5.9% 9.8% Intermediate-term government 5.2% 5.6% U.S. Treasury bills 3.4% 3.1% Inflation 3.0% 4.0% 2. Plug your required return number for Goldman Sachs into the dividend discount model (DDM) and determine the intrinsic value of Goldman Sachs. Use the expected annual dividend shown in Value Line for the next year. Using Value Line, calculate a growth rate.

3. Look up the common stock price of Goldman Sachs in The Wall Street Journal, and determine whether Smucker common stock is undervalued or overvalued based on your analysis. Would you buy?

4. Using Value Line as your reference, use the P/E Model to determine the intrinsic value of Goldman Sachs stock. Compare this value to the current market price. Is the stock undervalued or overvalued. Would you buy?

5. Using Value Line as your reference, use the Earnings Model to determine the intrinsic value of Goldman Sachs stock. Compare this value to the current market price. Is the stock undervalued or overvalued. Would you buy?

6. Using Value Line as your reference, use the P/B Model to determine the intrinsic value of Goldman Sachs stock. Is the stock undervalued or overvalued. Would you buy?

7. Using Value Line as your reference, use PEG evaluation to determine the intrinsic value of Goldman Sachs Stock stock. Is the stock undervalued or overvalued? Would you buy?