The purpose of this paper is to determine what I would pay for nose candy sh ares of bank line in Caterpillar Inc. to be delivered to me in unity year. Currently, the average selling price of CAT extraction is amidst $64.78 and $85.70 per share-todays price was $73.43. For 100 shares of this stock to be delivered to me in angiotensin converting enzyme year, I would be willing to pay $8737.86. For this figure, I included a 3% discount rate. In the pursuance paragraphs I will provide an explanation for these figures.
The first documentary of this assignment was to estimate the price per share of this stock one year from now. I predict that the price of CAT stock one year from now will be $90 per share. Using a five year price bill chart for Caterpillar I was unable to spot a usable trend because the prices were waffling with only a few peaks and valleys. I decided instead to use a couple of another(prenominal) indicators. CAT stock has a P/E balance of 16.76 and an earnings per share (EPS) value of $3.92. Although the P/E balance is relatively low, this stock is expected to do very tumesce in the next year. In comparison to its competitors, this stocks P/E has typically stayed somewhat relative to the boilers suit industry (CAT-12.8%, Industry-13.37%).
The EPS is expected to grow from $3.92 to $5.64 by December 2005. Because the P/E for this stock is relatively low and the expected EPS is high, this stock is a good buy and people will conk buying. As people buy, the demand will go up and so will the price, thus my estimate of $90. Analyst are predicting it to go much higher than that ($100-$111), however, the highest this stock has been in the last-place five years was...
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