I need assistance with writing a paper in which I describe the current market price of an organization's equity - the organization selected is Toyota using one valuation model.© BrainMass Inc. brainmass.com June 3, 2020, 11:46 pm ad1c9bdddf
Good luck in your studies!
>> Calculations are attached in the excel file too. <<
For finding the stock price of Toyota I am using CAPM model for finding the cost of equity and Constant growth model for finding the price.
The CAPM prices individual securities or portfolios to determine expected return, and to determine how the "future cash flows of (an) asset can be discounted to (its) present value... to establish the correct price for the asset." (Wikipedia.org) Theoretically, when an asset's observed price is the same as its CAPM value it has been priced correctly. Any observed price that is higher or lower than that of the intrinsic value of the asset.
According to Investopedia.com, the Capital Asset Pricing Model (CAPM) "describes the relationship between risk and expected return and... is used in the pricing of risky securities." The formula used for CAPM is shown below: ...
Response helps in estimating Current Market Price of Toyota's Equity