Compute the WACC of your Telsa.
Complete the Excel with the Microsoft valuation. Make sure you include the following additional computations:
Reinvestment rate and return on capital as computed in homework 8 for the year 2018.
Sensitivity analysis of the final stock price for the terminal value, that is, compute the stock price that comes out of your valuation for WACC 0.5% smaller and larger than your initial guess and for a growth rate 0.5% smaller and larger than your initial guess.
Compute the implied growth rate with the Gordon Growth model for the following ",dividend aristocrats". that is, firms which have been consistently increasing their dividend in the past:
Johnson & Johnson ($JNJ)
3M ($MMM)
Target ($TGT)
To find the implied growth rate, research their last full-year dividend and run a regression over 5 years of monthly returns to estimate their beta. For each firm, analyze if the use of the Gordon Growth model is appropriate. Explain your answers.