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The two companies to be analyzed are Apple and Samsung
1. For each company, collect the past 60 months stock return and market index return, compute the beta of these two stocks. Does beta measure justify the amount risk in these two companies operation?
2. Find the most recent Tbill yield and market risk premium. You can use S&P500 index as proxy for market index.
3. Using CAPM and beta you got in 1, compute the required rate of return of these two companies.
4. Find out the current dividend payment and projected dividend growth, using the dividend discount model (DDM); estimate the intrinsic value of these two companies. Compare your estimation with the current stock price, what conclusion you can get? If no dividend is paid, use the free cash flow model or the price multiple approach to estimate the stock price. If price multiple approach is used, please include at least three financial ratios, and clearly indicate the choice of benchmark.
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