Zachary-An investor with common sense

On July 5th, I posted my first stock valuation of Costco in  Link  and  Link2 , and I got a price of $966.17. However, I learned today that I made a mistake when valuing the equity risk premium in part 1- Link . If you check the end of the figure below, I used the implied risk premium from the NYU Stern dataset, which is calculated by the expected return of stock -risk-free rate. But when I calculate the cost of capital, I use the weighted average implied risk premium as market risk premium to calculate the cost of equity.  But the cost of equity formula is Risk-free rate+Beta*(Expected return of Market-Risk free rate). So by using implied risk premiums, I mistakenly subtracted risk free rate twice, largely underestimating the cost of equity.   In addition, I used 8.99% as a long-term market risk premium for terminal value calculation. The rate is calculated by my own calculation for US stock return for the past 30 years, which can also be biased. Today, I ...

Note: I found that I made a serious mistake in estimating the cost of equity in this valuation; Please check this Link  while reading the cost of equity and cash flow part.   Words for Readers This analysis is meant to teach those with NO investment experience or those who have attended business school but only know how to price a company rather than value a company. If you are interested in learning investment from this analysis, I recommend you pick a company and value at the same time while reading this paper. It took me several days to learn most of the knowledge I used in this paper, but it took several months when I valued the first company (My first valuation is AMD, not for this one, though). Not until you started did you realize that you always have things to figure out. Along the analysis, I will try my best to explain any financial terms you may have never heard of. If you feel confused, please be patient and follow my path. If you still cannot understand some ter...