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Name

SKY NETWORK TELEVISION

NZX 50 

RFR p.a.

14.07.2009

4,14

1869,29

0,0279

14.08.2009

4,73

2141,46

0,0276

14.09.2009

4,76

2105,54

0,0277

14.10.2009

4,83

2133,24

0,0279

14.11.2009

4,95

2108,69

0,028

14.12.2009

4,85

2053,39

0,0278

14.01.2010

5,19

2172,35

0,0278

14.02.2010

4,73

2040,34

0,0273

14.03.2010

5,08

2119,55

0,0267

14.04.2010

5,16

2174,19

0,0269

14.05.2010

4,81

2078,41

0,0289

14.06.2010

4,64

1967,74

0,0307

14.07.2010

4,8

1955,46

0,0323

14.08.2010

5,01

1946,98

0,0325

14.09.2010

5,2

2043,19

0,0318

14.10.2010

5,15

2069,79

0,0318

14.11.2010

5,44

2095,36

0,0317

14.12.2010

5,16

2069,15

0,0317

14.01.2011

5,3

2119,48

0,0319

14.02.2011

5,35

2128,02

0,0313

14.03.2011

5,46

2093,05

0,0269

14.04.2011

5,83

2140,91

0,0265

14.05.2011

5,72

2190,2

0,0266

14.06.2011

5,62

2148,2

0,0265

14.07.2011

5,8

2096,63

0,0271

14.08.2011

5,75

1977,91

0,029

14.09.2011

5,36

1978,81

0,0288

14.10.2011

5,48

1987,35

0,0276

14.11.2011

5,38

1987,75

0,0269

14.12.2011

5,2

1963,08

0,0269

14.01.2012

5,24

1929,2

0,0274

14.02.2012

5,05

1990,51

0,0275

14.03.2012

5,29

2080,1

0,0274

14.04.2012

5,25

2049,09

0,0274

14.05.2012

5,48

2087,52

0,0259

14.06.2012

4,94

1996,43

0,0261

14.07.2012

5,06

2040,12

0,0267

14.08.2012

5,2

2106,35

0,0264

14.09.2012

5,03

2201,96

0,0264

14.10.2012

5,01

2231,87

0,0265

14.11.2012

5,08

2261,21

0,0264

14.12.2012

4,83

2260,95

0,0265

14.01.2013

4,97

2360,24

0,0266

14.02.2013

5,1

2408,1

0,0266

14.03.2013

5,27

2464,05

0,0264

14.04.2013

5,33

2479,84

0,0265

14.05.2013

5,47

2596,32

0,0264

14.06.2013

5,63

2459,92

0,0264

14.07.2013

5,41

2539,08

0,0264

14.08.2013

5,25

2514,77

0,0264

14.09.2013

5,72

2569,93

0,0265

14.10.2013

6,01

2589,35

0,0267

14.11.2013

6,22

2690,88

0,0266

14.12.2013

5,85

2565,92

0,0273

14.01.2014

5,94

2646,48

0,0288

14.02.2014

5,78

2658,54

0,0293

14.03.2014

6,28

2746,7

0,0305

14.04.2014

6,45

2718,11

0,0324

14.05.2014

6,39

2796,4

0,0338

14.06.2014

6,7

2762,55

0,0352

14.07.2014

6,55

2737,26

0,0368

 

Investment and Portfolio Analysis

Group Assignment 4

 

Question 1: Equity Analysis

 

One of the core business areas of A.P. Investments is active asset allocation and to be successful in this area it is important that A.P. Investments has superior stock picking skills. What your boss would like you to do is to come up with a recommendation to buy, sell or hold the stock of Ryman HealthCare. This is a complex task as it requires you to combine many of the skills you have applied previously.

 

To give you some direction, your boss has told you that he wants you to apply a three-stage Dividend Discount Model. In this model the key ingredients are: k, the cost of equity/required rate of return; g, the growth rate in dividends; and D, the dividend.

 

To estimate the cost of equity, k, your boss has provided you with 5 years of monthly data and suggests you use the CAPM to estimate the historical beta. Once you have estimated the beta, you can compute the expectedcost of equity. To do this your boss suggests that you use a risk-free rate of3% and a market risk premium of 7.5%.

 

To determine the growth rate of dividends your boss suggests the following approach. For the years 2014-2016 you assume that dividends will grow at the historical dividend growth rate for the period from 2006 to 2013. From 2017 - 2019 the dividend growth rate will increase by 2% p.a. From 2019 onwards dividends will grow at a constant rate of 7% p.a.

 

Use the dividend discount model to determine a fundamental value for Sky TV’s stock price. Given that the current price of Sky TV is $6.52, what is your recommendation?  

 

 

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    I attached The question with is data n I am keen to get an answers provide with its explanation
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