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Fundamental Analysis for Microsoft

I want to know the current fair value for Microsoft compared to the market using 3 models I believe are the best:
Discounted Cash Flow; Dividend Discount Model; Residual Income Model.
It should be explained properly on how you got your inputs or calculated them. Compare the fair value to the market and conclude with an executive summary with a recommendation of Buy, Sell or Hold.

The content should be :
1. Intro
2. Model 1
3. Model 2
4. Model 3
5. Executive Summary.

Solution Preview

See the attached file.

Valuation Background:
There are several valuation techniques which are applied to get a sense of the computed value of a company as compared to the actual value at which the stock price currently trades. There is no one best method for stock valuation which can suit all type of organization. The valuation technique will differ from industry to industry.
In the given analysis we have computed the value of Microsoft under three different valuation techniques as below:
1. DCF method: Discounted cash flow (DCF) analysis uses future free cash flow projections and discounts them (most often using the weighted average cost of capital) to arrive at a present value, which is used to evaluate the potential for investment. If the value arrived at through DCF analysis is higher than the current cost of the ...

Solution Summary

A fundamental analysis for Microsoft is examined in the solution.