About Microsoft Corporation
Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. Microsoft strive to create local opportunity, growth, and impact in every country around the world. Microsoft is creating the platforms and tools, powered by artificial intelligence ( AI ), that deliver better, faster, and more effective solutions to support small and large business competitiveness, improve educational and health outcomes, grow public-sector efficiency, and empower human ingenuity. From infrastructure and data, to business applications and collaboration, company provide unique, differentiated value to customers.
FCFE Details of Microsoft Corporation shown below, US$ in millions, except per share data, based on values on 10/14/2024
|
Year |
Value |
FCFE or Terminal Value |
Present Value at 12.86% |
|
0 |
FCFE0 |
89,311 |
89,311 |
|
1 |
FCFE1 |
111,888 |
89,311 |
|
2 |
FCFE2 |
135,810 |
75,943 |
|
3 |
FCFE3 |
147,476 |
91,025 |
|
4 |
FCFE4 |
167,518 |
88,585 |
|
5 |
FCFE5 |
183,784 |
113,631 |
|
5 |
Terminal Value (TV5) |
6400,934 |
349,772 |
|
Intrinsic value of Microsoft Corporation |
$3956,270 |
|
Market cap of Microsoft Corporation |
$3.115 Trillion |
|
Intrinsic value of Microsoft Corporation common stock (per share) |
$532 |
|
Current share price on 10/14/2024 |
$419 |
Required rate of Return
Assumptions
|
Rate of return on LT Treasury Composite(Rf) |
4.36% |
|
Expected rate of return on market portfolio(E(RM) |
13.81% |
|
Systematic risk of Intuit Inc. Common stock (β) |
0.54 |
|
Required rate of return on Intuit Inc. Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 4.36% +0.9[13.81% - 4.36%] |
12.86% |
FCFE Growth rate (G) Forecast
Microsoft Corporation. H-Model
|
Year |
Value |
g |
|
1 |
g1 (PRAT Model) |
25.28% |
|
2 |
g2 (Linear Interpolation) |
21.38% |
|
3 |
g3 (Linear Interpolation) |
17.45% |
|
4 |
g4 (Linear Interpolation) |
13.6% |
|
5 |
g5 (Single stage model) |
9.7% |
2023 Calculations
|
Retention rate |
72.63% |
|
Gross Profit Margin |
68.9% |
|
Profit margin |
34.14% |
|
Asset turnover |
51.43% |
|
Financial leverage |
2 |
|
Return on Invested Capital |
39.68% |
|
EPS |
11.86 |
|
PE Ratio |
35.34 |
Sources :Form 10K of Microsoft Corporation for the fiscal year 2023, Microsoft 2023 Annual Report, https://www.stock-analysis-on.net/ , https://finance.yahoo.com/ , https://companiesmarketcap.com/
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