It may look like a lot of work, but its very very simple!
For this case, you will determine whether McDonald's is overvalued, undervalued or fairly priced using Intrinsic Valuation techniques. So you need to write a memo. Then you will come up with a recommendation given both the Relative Valuation Models and the Intrinsic Valuation models I have built.
Spreadsheet: use the spreadsheet I sent in, I built these models, I put all the information you will need for McDonald's, there is a summary table in the last tab.
There are 13 models.
I will also attach a memo template.
Purpose: Write 2 or 3 sentences to describe the purpose of the memo.
Intrinsic Valuation Models: Describe models, inputs, augmented dividend and FCFE. (About 10 sentences.)
FOR UP TO 15 EXTRA POINTS. Discuss why it may not be realistic to assume the augmented dividend will be paid every year and grow at the constant rate forever. Design and describe an alternative model with more realistic assumptions.
Results: Insert the Summary table from the excel model. Summarize the results of the model. (About 5 sentences.) (I have created this table for you)
Recommendation: Consider your findings from the relative valuation model and the results from the Intrinsic model together. Do you recommend that investors Buy, Short or Hold the stock. Back up your recommendation with at least 3 data points. (About 6 sentences.) -Majority of the findings are short because McDonald’s has a negative growth rate, or the growth rate is too minimal and therefore not worth it’s share price. if you need more background info let me know but i think thats more than enough