Prior to beginning work on this discussion forum, read Chapter 10 in the textbook. The value of a common stock is based on the present value of the future cash flows that will accrue to that stock. Of course, the present value calculation necessarily involves the use of a required rate of return (a discount rate) which reflects the risk. The textbook indicates that “To some extent, the two concepts of P/E ratios and dividend valuation models can be brought together. A stock that has a high required rate of return (Ke) because it’s risky will generally have a low P/E ratio. Similarly, a stock with a low required rate of return (Ke) because of the predictability of positive future performance will normally have a high P/E ratio” (Block et al, p. 322). In this discussion, you will examine the relationship between a stock’s required rate of return and its P/E ratio.

Initial Response:

For this discussion forum,

• Watch the video, Dividend Discount Model (DDM) (Links to an external site.).
• Select a publicly traded company that pays dividends. You may select any publicly traded company that pays dividends, or choose one of the companies discussed in 65 Best Dividend Stocks You Can Count On in 2021 (Links to an external site.).
• Determine the most recent stock price and the total dividends paid over the past year.
• Calculate the current dividend yield on the stock.
• Calculate the required rate of return (Ke) for an investment in the common stock. You should use formula 10-9 in the textbook to do this calculation and use an assumed growth rate of 5%.
• Identify the current P/E ratio for the company from a source such as Yahoo! Finance or Barron’s.

In your post,  

• Show your calculations of the dividend yield and required rate of return (Ke), and present the P/E ratio.
• Explain the relationship between your chosen company’s Ke and P/E ratio and what that relationship indicates about the risk of the company’s future cash flows.
• Explain whether the general relationship between a high Ke and a low P/E ratio (or low Ke and high P/E ratio) is supported by the data for your chosen publicly traded company.
• Predict the impact on the company’s stock price based on your forecast that the company will grow its dividends by a rate higher than 5%.
• Compare your company’s P/E ratio with the P/E ratios of two other companies in its industry.
• Hypothesize which company in this industry should have the lowest Ke based on the P/E comparisons.
• Summarize the connection between a company’s growth rate, its required rate of return, and its value (stock price).

Be sure to think strategically and apply the concepts from the course textbook.

Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and/or credible resource in addition to the text.

Guided Response: Respond to at least two of your fellow students’ or instructor posts in a substantive manner and provide information or concepts that they may not have considered. Each response should have a minimum of 100 words and be respectful of others’ opinions and beliefs that differ from your own. You are encouraged to post your required replies earlier in the week to promote more meaningful and interactive discourse in this discussion forum. Continue to monitor the discussion forum until Day 7 and respond with robust dialogue to anyone who replies to your initial post.

Assignment Description:

Based on what you have learned so far this week, create a PowerPoint presentation (18-21 slides) with detailed notes for each slide that addresses each of the following points/questions. Be sure to completely answer all the questions. Use clear headings that allow your professor to know which bullet you are addressing on the slides in your presentation. Support your content with at least four (4) citations throughout your presentation. Make sure to reference the citations using the APA writing style for the presentation. Include a slide for your references at the end. Follow best practices for PowerPoint presentations (an example is in the Resources tab) related to text size, color, images, effects, wordiness, and multimedia enhancements.

• Describe the factors that determine the stability and uncertainty of an organization’s environment.• Compare and contrast open and closed systems.• Discuss the various strategies organizations use to develop and sustain interorganizational relationships.• Discuss the advantages and disadvantages of the four basic organization structures.

• Title slide: 1 slide formatted in APA style
• Organization environment: at least 4 slides
• Systems: at least 4 slides
• Interorganizational relationships: at least 4 slides
• Organization structures: at least 4 slides
• Reference slide: at least 1 slide formatted in APA style
• Additionally, because a good presentation has few words on the slides include a script with the verbiage you would say when presenting; script should be a minimum of 50 words per slide.                      

She prefers limited info on slides & detailed speaker notes

Pointers given by instructor on last ppt: \”Not all citations are in APA format. Citations are needed on content slides and in notes where external information is being presented. Good content and consider adding images or graphics to your presentation.\” \”Your presentation was filled with information. Reduce the amount of content on slides. Citations needed on all content slides and in speaker notes.\”