/
Questions/
Coursework/
Challenge Google’s market price in mid-2008 by challenging the forecasts implicit in the market price: Company Valuation Course Work, UOL, UK
Looking For Plagiarism Free Answers For Your UK College/ University Assignments.
BUY NOWChallenge Google’s market price in mid-2008 by challenging the forecasts implicit in the market price: Company Valuation Course Work, UOL, UK
University | University of London (UOL) |
---|---|
Subject | Company Valuation |
- Challenge Google’s market price in mid-2008 by challenging the forecasts implicit in the market price. Tease out those forecasts using the abnormal earnings growth valuation model.
In mid-2008, Google traded at $520. Analysts at the time were forecasting EPS of $19.61 for 2008 and $24.01 for 2009, yielding a forward P/E of 26.5. Analysts’ consensus five-year EPS growth rate (this the EPS growth rate in 2010, 2011, 2012) was 28 percent. Google will pay no dividend. - Apply abnormal earnings growth (AEG) valuation to value a share of Google based on these forecasts. Beta shops report a typical beta for Google of about 2.0, so use a high required return of 12 percent (against the risk-free rate of 4 percent). Assume that AEG after 2012 grows at 4% per year, which is the long-term average GDP growth rate.
- Analysts’ intermediate-range forecasts (up to five years ahead) are notoriously optimistic, especially for a “hot stock” like Google. Therefore, now use only the 2008 and 2009 EPS forecasts by analysts, and estimate the growth rate in abnormal earnings growth (AEG) that the market is forecasting (i.e. is implicit in the stock price in mid-2008) for years after 2009. Now assume that AEG after 2009 grows at a constant rate that need not equal the long-term average GDP growth rate. Also compute EPS each year until 2014 implied by the growth rate in AEG that the market is forecasting. What does your answer tell you about analysts’ five-year growth rate of 28 percent (EPS growth rate in 2010, 2011, 2012) mentioned above?
Do You Need Assignment of This Question
Get help by expert
Attention University of London (UOL) students in Singapore! Are you facing difficulties with your coursework? We’ve got the solution for you! Our top-notch essay writing service and online assignment helper are designed to meet your academic needs. Now, Singapore students can easily pay our experts for invaluable assistance throughout their courses. Let us help you unravel the mystery behind Google’s market price in mid-2008 by critically examining the implicit forecasts embedded within it. Our team of professionals is here to guide you through your Company Valuation Course Work at UOL, UK. Don’t let the challenges overwhelm you – reach out to us today and unlock your academic success!
Recent solved questions
- ILM: Assess own leadership behaviours and potential in the context of a particular leadership model and own organisation's working practices and culture: Leadership skills and development, Assignment, UOA, UK
- ILM: Describe the factors that will influence the choice of leadership styles or behaviours in workplace situations: Leadership skills and development, Assignment, UOA, UK
- ATHE Level 7 Unit 5 : You Have Been A Senior Manager For Several Years And Have Decided That Your Next Career Move Should Be To Take Responsibility: Personal Development for Leadership and Strategic Management Assignment, UK
- You are required to prepare a 5-year strategy review to shareholders for evaluating the business simulation: 5-year strategy review to shareholders, Report, UOEL, UK
- CMI Unit 502: Approaches to achieving a balance of skills and experience in a team: Principles of Developing, Managing and Leading Individuals and Teams, Assignment, UK
- CMI Unit 502: Principles of Developing, Managing and Leading Individuals and Teams, Assignment, UK
- UNIT-701: How the principles of strategic leadership can be applied to respond to complex organisational challenges: Strategic Leadership, Assignment, CMI, UK
- UNIT- 701: The leadership behaviours and skills required to deliver strategic goals: Strategic Leadership, Assignment, CMI, UK
- UNIT- 701: Understanding of how the organisational context influences management and leadership practice: Strategic Leadership, Assignment, CMI, UK
- Evaluate the concept of evidence-based practice and assess how approaches to evidence-based practice: Evidence - based practices, Report, UOH, UK