FIN 6060: Financial Decision Making

Module 2 - Stock and Bond Valuation Worksheet

Stock and Bond Valuation

Nneoma Anulika Edebeatu

Masters of Business Administration

FIN 6060: FINANCIAL DECISION MAKING

Nexford University

PROFESSOR KEITH WADE

NOVEMBER 11 2024
 FIN 6060: Financial Decision Making
Module 2 - Stock and Bond Valuation Worksheet

Complete this worksheet using the directions within to guide you. Submit your completed worksheet in the “Assignment
and Grades” tab in your course menu. When you have submitted this assignment for grading, please return to Module 2 for
a module wrap-up.

Stock and Bond Valuation

Directions Tesla General Motors Apple Google Amazon

Step 1. Examine http:// http:// http:// http:// http://

the annual reports www.annualreports. www.annualreports. www.annualreports. www.annualreports. www.annualreports.
for the provided com/Company/tesla- com/Company/ com/Company/ com/Company/ com/Company/
companies. motors general-motors apple-inc google-inc amazoncom-inc

Step 2. Provide Principal Amount of Principal Amount of Principal Amount of Principal Amount of Principal Amount of
information the Bond Bond Bond Bond Bond
outstanding bonds Answer:$1.840 billion Answer: $500million Answer: $3 billion Answer: $2.0 Billion Answer: $1.5 Billion
outstanding at each
company. Maturity Date Maturity Date Maturity Date Maturity Date Maturity Date
Answer: August 15, Answer: 17 Jan 2029 Answer: May 4, 2043 Answer: August 15, Answer: December 5,
2025 2060 2044
Coupon rate of interest Coupon rate of interest
Coupon rate of interest Answer: 5.65% Answer: 3.85% Coupon rate of interest Coupon rate of interest
Answer: 5.3% Answer: 2.25% Answer: 4.95%
Time period for each Time period for each
Time period for each interest payment interest payment Time period for each Time period for each
interest payment Answer: Semiannually Answer: Semiannually interest payment interest payment
Answer: Semiannually Answer: Semiannually Answer: Semiannually
Price of the bond: Price of the bond:
Price of the bond: Answer:$1,838.70 Answer:$1,021.20 Price of the bond: Price of the bond:
Answer: Answer: $299.26 Answer: $631.57
 FIN 6060: Financial Decision Making
Module 2 - Stock and Bond Valuation Worksheet

$798.83 (General Motors, (Apple, 2024)

(Tesla, Inc., 2022) 2023) (Alphabet, 2024) (Amazon, 2023)

Step 3. Indicate if Premium or Premium or Premium or Premium or Premium or

the bonds are Discount? Discount? Discount? Discount? Discount?
selling at a premium
or discount. Answer: Discount Answer: Discount Answer: Discount Answer: Discount Answer: Discount
Step 4. Indicate Additional Factors Additional Factors Additional Factors Additional Factors Additional Factors
factors (other than 1. EV sector Trends: 1. Sector Trends in 1. Consumer Trends 1. Data Privacy 1. E-commerce
the interest rates
and the time
The prices of the Automobile and Tastes: and Security and Retail Trends:
periods) to explain Tesla bond are Industry: Bonds Fluctuations in the Concerns: The Fluctuations in
the differences in impacted by the are impacted by demand for a new regulatory scrutiny internet shopping
the prices of the broader Electric changes within the tech product have can affect the and competition
bonds. Vehicle Sector automotive an impact on the confidence of effectively affect
developments and industry, new rules performance and investors, and also the bonds' prices.
trends. and regulations and bond prices at price of bonds. 2. Cloud
2. Growth technological Apple. 2. Financial Computing
Prospects: Investors development. 2. Competitive Health: Google's Performance:
consider Tesla's 2. Consumer Landscape: price of bond is Amazon Web
market share and Confidence: The Apple's market influenced by its Services' growth
innovation potential, purchasing of share and prices of profitability, debt and profitability
to estimate prices of automobiles by bonds are affected level and stability play a huge role in
the bond. consumers affects by changes in the 3. Market bond pricing.
3. Market Liquidity: the sales of GM technology Perception and 3. Prime
Liquidity of Tesla and also the price competition. News: Public Membership
bonds impacts their of bonds. 3. Dividend sentiment and news Growth:
volatility, and the 3. Labor Relations: Payment and about Google have Membership
accuracy of the price Union relations and Share Buyback: an impact on bonds revenues are a type
(Tesla, 2024a). labor developments Apple’s capital price of recurring revenue
affect manufacturing returns affects the stability(FINRA, and aids in the bond
cost and bond price company's cash 2024) valuation of
 FIN 6060: Financial Decision Making
Module 2 - Stock and Bond Valuation Worksheet

in GM (FINRA, flow and price of Amazon.(FINRA,

2024) bonds.(FINRA, 2024)
2024)

Step 5. Examine Assume the required rate of return is 2% and the growth rate is 1%. Calculate the price of the stock using the
the most recent dividend discount model.
dividend paid by Answer:
General Motors and
respond to the General Motors Company's (GM) quarterly dividend per share was $0.12 as of December 19, 2024 (Koyfin, 2023).
provided prompts. The dividend discount model formula is.
P = D/(r-g)
P = price of the stock
D = expected dividend payment =$0.12
r = Required rate of return (investor’s discount rate)= 2% =0.02
g = Growth rate of dividends =1% = 0.01
P= $0.12/(0.02-0.01)= $0.12/0.01 =$12
The current price of General Motors (GM) stock is $55.58 as of November 8, 2024 (MarketBeat, 2024)
Use the Internet to search for the current price of GM stock. Is it the same as your calculation?
Yes or No?:
No, based on the calculated results from the Dividend Discount Model the value of the company’s stock
should be $12 whist at the moment it stands at $55.58.
If your calculation is not the same, explain why there is a difference.
Explanation:
The Dividend Discount Model (DDM) is based solely on expected dividends, growth rates and required
returns, assuming future dividends reflect the stock’s intrinsic value. However market price factors in
broader influences, like investor sentiment, economic outlook and GM’s financial performance which will
cause a huge difference from the theoretical price
 FIN 6060: Financial Decision Making
Module 2 - Stock and Bond Valuation Worksheet

REFERENCES

Alphabet. (2024). Alphabet Investor Relations. Alphabet Investor Relations. https://abc.xyz/investor/

Amazon. (2023). Amazon.com, inc. - annual reports, proxies and shareholder letters. Ir.aboutamazon.com.

https://ir.aboutamazon.com/annual-reports-proxies-and-shareholder-letters/default.aspx

Apple. (2024). aapl-20230930. Www.sec.gov. https://www.sec.gov/Archives/edgar/data/320193/000032019323000106/aapl-20230930.htm

FINRA. (2024). Bonds | FINRA.org. Www.finra.org. https://www.finra.org/investors/investing/investment-products/bonds

General Motors. (2023). Form 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934 GENERAL MOTORS COMPANY.

https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_GM_2023.pdf

Koyfin. (2023, November 30). General Motors Company (GM) Dividend Date & History | Koyfin. Www.koyfin.com.

https://www.koyfin.com/company/gm/dividends/

MarketBeat. (2024, November 9). Insider Selling: General Motors (NYSE:GM) President Sells 122,283 Shares of Stock. MarketBeat.

https://www.marketbeat.com/instant-alerts/general-motors-nysegm-president-sells-674513028-in-stock-2024-11-08/
 FIN 6060: Financial Decision Making
Module 2 - Stock and Bond Valuation Worksheet

Tesla. (2024a). Tesla’s Senior Notes Going Green- Analysis of Tesla’s Sustainable Bonds. Sustainable Investing.

https://sustainableinvest.com/are-teslas-senior-notes-green/

Tesla. (2024b). tsla-20240630. Www.sec.gov. https://www.sec.gov/Archives/edgar/data/1318605/000162828024032662/tsla-20240630.htm

Washington, D. (2023). UNITED STATES SECURITIES AND EXCHANGE COMMISSION.

https://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_TSLA_2023.pdf