Sustainable Growth Rate You can find the home page for Caterpillar, Inc., at www.caterpillar.com. Go to this page and find the most recent annual report for Caterpillar. Calculate the sustainable growth rate for each of the past two years. Are these values the same? Why or why not?
Sustainable Growth Rate Go to finance.yahoo.com and find the analysts' estimates for DuPont's (DD) growth rate over the next five years. How does this compare to the industry, sector, and S&P 500 growth rates? Now find the EPS and dividends per share for DuPont and calculate the sustainable growth rate. How does your number compare to analysts' estimates for the company? Why might these estimates differ?
Perpetual Dividend Growth Model Go to finance.yahoo.com and find the following information: the beta, the most recent annual dividend, and analysts' estimated growth rate for Johnson & Johnson (JNJ). Next, find the three-month Treasury bill yield on finance.yahoo.com. Assuming the market risk premium is 9 percent, what is the required return for JNJ? What is the value of JNJ stock using the perpetual dividend growth model? Does JNJ appear overpriced, underpriced, or correctly priced? Why might this analysis be inappropriate, or at least misleading?
