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A Quantitative Analysis of Apple's Present Value

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A Quantitative Analysis Of Apple's Present Value
Apple (NASDAQ:AAPL) announces earnings next week, and so we feel it is an appropriate time to quantitatively value the equity. Justification for a Weighted Averages Model To value this stock, we have employed a FCFE Weighted Averages Model (further explained below). We believe this model is an appropriate valuation method for all equities. In relation to Apple, we feel it is especially useful since Apple's growth can be qualitatively segmented: excellent short-term growth in the upcoming year due to iPhone 6 and Mac sales; good growth in the next 5 years due to brand relevancy and superior technology/products; and stable growth thereafter due to continued innovation. We affirm that the iPhone 6 will continue to post record-breaking numbers, and that Mac sales will continue their upward trend. We also credit the iWatch as having good growth potential for the company, as can be detailed here. We then affirm that Apple's growth over the next five years should be good, maybe even double-digit good, although we still think Apple could experience negative earnings growth (as they did from 2013 to 2012) if the iPad continues to slump, the iWatch doesn't take off, and Mac and iPhone sales stagnate. Further, we believe in the longevity of Apple. Apple has sustained itself as a dominant player in the tech realm for over a decade now, and we don't see that trend reversing in the long-run. Despite concerns over R&D spending, we believe those concerns, at worst, evince themselves in stagnated long-term growth (i.e. a stable growth rate of 0%). Our Five-Year Forecasts (An Income Statement Look) We have crafted two five-year forecasts (optimistic and pessimistic) for Apple for determining what growth rate bounds we should employ in our Weighted Averages Model. To understand the parameters that influence these forecasts, let us

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