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Presentation/PPT
27/08/2022
Explain/discuss your expected HPR in detail, including its formula, for Nike. Justification summary on Nike as of the initial project date. (For example, support the following: “Buy” on a long position.)
Appendix,General Guide for Investment Project Reports*I. Review the section in Chapter 13, 13.3 Dividend Discount Models, textbook.II. Retrieve “JNJ_VLIS_Aug 9, 2016” available at the Canvas Learning Module Details for LM7 (LM7 Details) and review it.III. Retrieve “A Modified Dividend Discount Model Excel Template (MDDM)” available the Canvas Learning Module Details for LM7 (LM7 Details) with help of understanding the textbook section above.IV. Read all other relevant reference files available at the Canvas Learning Module Details for LM7 (LM7 Details)Further, follow the steps below.Step 1: Obtain the latest VLIS (Value Line Investment Survey) for your position assigned (one long position chosen from 30 DJIA, Dow Jones Industrial Average, components) from the VLIS website.(Go to the Value Line websitehttps://research.valueline.com/research#sec=libraryType your stock’s ticker symbol in “Company name or symbol” (in the blank box at the upper right corner of the page) and hit [Enter] key.Click on “PDF Reports” and click on the latest date of the pull-down menu at the upper right corner of the page.)Or go to Eudora Welty Library, Jackson, MS or other places for the hard copies of VLIS report.*** The Canvas Learning Module Details for LM7 (LM7 Details) will have the VLIS for your position assigned to you.Step 2: Open “A Modified Dividend Discount Model Excel Template” (MDDM.v4c.xlsx) in your Excel program.Step 3: For your position assigned, which is one from 30 DJIA components:16Collect the necessary input data from the Value Line Investment Survey report of your choice and other sources and enter TEN (10) input data in the template — EIGHT (8) entries directly from the VLIS and your own subjective TWO (2) entries based on your research: 1) Beta2) Recent Price (P0) (Preferably, the price at the beginning of the project.)3) D1D2 (No need to enter manually. MDDM.v4 Excel program auto-calculates.)D3 (No need to enter manually. MDDM.v4 Excel program auto-calculates.)4) D45) ROE6) DPR7) PE8) EPS4(Dividends per share: D1, D2, D3, D4, where D1 = Dividend at the end of 1st year; D2 = Dividend at the end of 2nd year; D3 = Dividend at the end of 3rd year; D4 = Dividend at the end of 4th year. D2 and D3 are for you to estimate/calculate, but the MDDM auto-calculates.)And determine your inputs for rf and Mkt-Prem: Risk-free rate (rf) (Use the latest 10-year Treasury interest rate);Expected Equity Market Premium (Mkt-Prem) (Read Dimson_2003.docx)(9) Risk-free rate (rf) (your subjective entry)(10) Expected Equity Market Premium (Mkt-Prem) (your subjective entry)(For example, a typical proxy for rf is a 10-year Treasury rate. Mkt-Prem is the difference between the expected market return and rf, or E(rm) – rf, in the CAPM equation. A typical E(rm) is an annual average return of the S&P 500 index based on a sample period like 10 years.)Step 4:For example, if your evaluation is as of year 2022, then D1=D,2023, etc.Therefore, D1 = D, 2023; D2 = D, 2024; D3 = D, 2025; D4 = D, 2026; D5 = D, 2027):17g = constant dividend growth rate= ROE * b, where b is the earnings retention ratio;P4 = P, 2026 = D7/(k-g) or P4 = P/E * EPS4 =P/E * EPS, 2026_k = rf + Beta*(E(Rm) – rf)V0 = V, 2022 = D1/(1+k) + D2/(1+k)^2 + D3/(1+k)^3 + (D4+P4)/(1+k)^4 where, for example, read D2/(1+k)^2 as D2 divided by (1+k) squared, etc.Step 5: Determine an investment decision based on the following rules.For a long position:If the company’s V0 > P0, P0 is underpriced, the recommendation is “Buy.”If the company’s V0 = P0, P0 is in equilibrium, the recommendation is “Hold.”If the company’s V0 < P0, P0 is overpriced, the recommendation is “Sell.”The Excel template automates the decisions using the twelve data inputs in the upper right portion of the spreadsheet. The decision for a long position is shown in the cell at the bottom right.Step 5: Make sure the decision shown in Cell at the bottom right matches your assigned position choice.Step 6: Your report should also contain the following incorporated in its abstract slide:1) an abstract summarizing your methodology and expected outcomes, outlining the purpose, objectives, and organization of your paper containing:— A research question (including Will the stock market rise or fall during the investment project? Why?)— Investigative questions (including Will an investor benefit from a long? Why?)— Measurement questions (including, for example, what percentage gain (holding period return) will an investor have from the long position of your investment project during the investment project? Why?)2) a presentation of the data collected and discussion on how this data set will help achieve the objectives and satisfy the methodological framework of the paper. 3) Note on Numerical Discussion of MDDM file of Slide 7MDDM spreadsheet presentation slide, the numerical discussion means discussion of or by numbers. For example, someone asks you what those numbers in the MDDM file you posted are, explain those numbers. In other words, the numerical discussion means discussing quantifiable measurements used in the discussion.18If you cannot explain those numbers, it implies you did not follow through the guideline instructions such as reading the chapter contents and/or understanding the examples in the textbook.To see the formulas in the output cells, with the edit enabled MDDM spreadsheet open, while holding Ctrl key down, hit ` (grave accent). The grave accent (`) is under the tilde (~) key on your keyboard.Ctrl + ` is in toggle mode, that is, holding Ctrl and hitting ` again will bring back the value display, vice versa.Please do not just copy and paste the formula in your report. Discuss your company’s numerical data for those formula in your discussion related to your conclusion and summary.Also, read the following file:How to Read a Value Line Report (“How to Read a Value Line Report.pdf”).It contains operational definitions of those input variables used in the MDDM spreadsheet
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