Posted: October 20th, 2016

Compute each stock�s required rate of return using the Capital Asset Pricing Model (CAPM) and beta from abov

Part 4: Stock Valuation and CAPM Draft (25 Points) This week you will draft Part 4 of the final Capstone Project. Compute the intrinsic value of the two stocks analyzed for Part 3 and compare the values to the reported market stock price in order to determine if the price is right. For Part 4, you should do the following: �Compute beta of each stock using regression analysis. Use data from 1/1/1996 ­ 1/1/2013. �Compute each stock�s required rate of return using the Capital Asset Pricing Model (CAPM) and beta from above. �Compute the intrinsic stock price using the Gordon Growth Model and the required rate of return. �Discuss whether the stocks are undervalued or overpriced. �Discuss the models used and their limitations, if any. �What are analysts� opinions of the firm�s stock value? �Discuss the discrepancies between the computed and actual stock prices. Your well­written draft should meet the following requirements: �Be two to three pages in length for the analysis and explanations �Be formatted according to the CSU­Global Guide to Writing and APA Requirements �Include Excel spreadsheet with all computations; this spreadsheet should be embedded in the Word document as an appendix after your analysis and explanations �Include a minimum of three credible references. The CSU­Global Library is a good place to find these references