APPLE INC

xlsx

School

Kenyatta University *

*We aren’t endorsed by this school

Course

402

Subject

Finance

Date

Nov 24, 2024

Type

xlsx

Pages

6

Uploaded by muthuri.paul

Report
P0 = Current stock price ? $0.24 g = Constant growth rate of dividends 2.70% r = Required rate of return CAPM CAPM r= risk free rate(Rf) + Beta x {risk premium (Rm) - risk free rate(Rf)} risk free rate(Rf) 3% Beta 1.3 risk premium (Rm) 6% r = Required rate of return 6.90% $5.87 P0=D0×(1+g)/r−g D0 = Most recent dividend payment P0=D0×(1+g)/r−g
As per current quarter 2023
a) Initial growth stage g1 = high growth rate during initial stage P0 = Current stock price ? $ 0.24 g = Constant growth rate of dividends 2.70% As per current quarter 2023 r = Required rate of return 6.90% P0 $ 5.87 Terminal stage DT = dividend payment at end of high growth $ 1.99 g2 = Stable growth rate for dividends 5.66% growth estimate in the next 5 years r = Required rate of return 6.90% PT = Terminal stock price $ 169.57 P0=D0×(1+g1)/r−g1 D0 = Most recent dividend payment PT=DT×(1+g2)/r−g2
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$ 2,924,070.00 $ 89,683.00 6.90% FCFE growth rate (g) 3.72 FCFE growth rate (g) by single-stage model g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0) Equity market value0 = current market value of Apple Inc. common stock (US$ in millions) FCFE0 = the last year Apple Inc. free cash flow to equity (US$ in millions) r = required rate of return on Apple Inc. common stock
$ 89,683.00 FCFE growth rate (g) = g5 3.72% 2.70% $ 94,759.06 2.96% 5 6.90% P0 $ 2,262,847.19 Two-Stage/Multi-Stage Growth FCFE Model P0=FCFE0×(1+g1)/r−g1 + FCFET×(1+g2)/(1+r)T FCFE0 = the last year Apple Inc. free cash flow to equity (US$ in millions) g_1 (initial high growth rate): Estimate the initial high growth rate of FCFE. FCFE_T: FCFE at the end of the high growth stage. g_2 (stable growth rate): Estimate the stable growth rate of FCFE.( PRAT MODEL) g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1) T: Number of years in the high growth stage. r (discount rate): Compute the discount rate using CAPM.
Introduction 1. Methodology a) Dividend Forecasting Constant Growth Model (Gordon Growth Model): b)Two-Stage/Multi-Stage Growth Model: Assumed specific growth rates for each stage and computed the terminal stock price. 2. Free Cash Flow Forecasting a) Constant Growth Model: Two-Stage/Multi-Stage Growth Model: Assumed growth rates for each stage and computed the terminal stock price. the information use to calculate the Apple's Inc was acquired rom finance.yahoo data as o November 2023 This report aims to provide a financial forecast for Apple Inc.'s dividends and free cash flow, utilizing the constant growth and two-stage/multi-stage growth models. Additionally, the Capital Asset Pricing Model (CAPM) is applied to compute the discount rate for valuation purposes. Utilized the formula P0=D0×(1+g1)/r−g1 assumed a constant growth rate 2.7% Developed a two-stage model considering an initial high growth stage and a subsequent stable growth stage. Applied the formula g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0) Developed a two-stage model for FCFE, considering an initial high growth stage and a stable growth stage.
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