Valuation Worksheets - Problems 6 and 7

Here it is, Dear Students! The Discounted Cash Flow Model in all its glory! Please work through the final two problems on the two stock valuation worksheets. As you do, please compare the types of companies that you find in problem 6 with the types of companies you find in problem #7. Can you see how the companies in problem 6 can make us wealthy over lengthy periods of time? Boring but reliable! Can you see how the companies in problem 7 can us wealthy very quickly ... but also can make us very sad if they crash and burn? The decision is yours, Dear Student! Do you want to eat well or do you want to sleep well? (If you invest primarily in the first group, you will eat well eventually and most of the time, you will sleep pretty well, too, although there will be times when our sleep will be interrupted by the inevitable market downturns. Don't panic! If the world does end, it does not matter where you have your money.)

Stock Valuation Worksheet 1

Commentary - Answer key

Remember that for problems 6 and 7, you will need the present value tables. As mentioned before, it helps to have the formula sheet handy.

Stock Valuation Worksheet 2

Answer key

Now hide your answers and do all these problems several times. Plus you will find that the problems in the assignment are (Hint, hint. Wink, wink.) exactly the same and in exactly the same order. The problems on the exam (Nudge, nudge. Wink, wink.) might just be similar, too, and in the exact same order. (Can we make it any plainer, hmm?)

Another Spreadsheet for your Consideration

Here is the Jimba Jomba Jumba Juice problem using a spreadsheet.