# Estimating Exxon Mobil Corporation's Intrinsic Stock Value Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions. In this chapter, we described the various factors that influence stock prices and the approaches that analysts use to estimate a stock’s intrinsic value. By comparing these intrinsic value estimates to the current price, an investor can assess whether it makes sense to buy or sell a particular stock. Stocks trading at a price far below their estimated intrinsic values may be good candidates for purchase, whereas stocks trading at prices far in excess of their intrinsic value may be good stocks to avoid or sell Although estimating a stock's intrinsic value is a complex exercise that requires reliable data and good judgment, we can use the Internet to find financial data in order to arrive at a quick "back-of-the- envelope" calculation of intrinsic value. 9. Until now, we have assumed that XOM’s dividend will grow at a long-run constant rate of 5%. To gauge whether this is a reasonable assumption, it's helpful to look at XOM's dividend history. If you go to the MSN Money website (www.msn.com/en-us/money/markets) and go to the annual income statement financials screen, you should see the firm's annual dividend over the past 4 years. On the basis of this information, what has been the average annual dividend growth rate? On the basis of the dividend history and your assessment of XOM's future dividend payout policies, do you think it is reasonable to assume that the constant growth model is a good proxy for intrinsic value? If not, how would you use the available data on the Internet to estimate intrinsic value using the nonconstant growth model?

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337395250

#### Solutions

Chapter
Section
Chapter 9, Problem 9TCL
Textbook Problem

## Expert Solution

### Want to see the full answer?

Check out a sample textbook solution.See solution

### Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Find more solutions based on key concepts
Show solutions
What is inflation and what causes it?

Principles of Microeconomics (MindTap Course List)

What is the importance of exports to the U.S. economy?

Foundations of Business (MindTap Course List)

How are inflation and unemployment related in the short run?

Brief Principles of Macroeconomics (MindTap Course List)

PURCHASING POWER PARITY A television costs 500 in the United States. The same television costs 312.5 euros. If ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is structured systems design?

Pkg Acc Infor Systems MS VISIO CD