DIRECTIONS: Here is the Unit #3 Weekly Writing Assignment that you should submit to your Unit #3 Homework Assignment Folder

DIRECTIONS: Here is the Unit #3 Weekly Writing Assignment that you should submit to your
Unit #3 Homework Assignment Folder.
Please submit your Unit #3 Writing Assignment Answer Sheet in MS Word format with the
following file name: LastNameFirstInitial_Unit 03_Writing Assignment.docx. For example, if
you name is John Smith, the file name should be SmithJ_Unit03_Writing Assignment.docx.
If you have any questions or comments, please do not hesitate to contact me.

NAME: _____________________________________
1. Write a short paper (100 words) comparing fundamental and technical anlaysis in which
you support one approach or the other.
2. Write a second short paper (about 200 words) about your recommendation to Ken and
Barbie Anderson.
Ken and Barbie Anderson are meeting with you to discuss their desire to obtain shares in
the upcoming initial public offering (IPO) of BookBusiness, Inc. The Andersons are
longtime users of BookBusiness’s services and are convinced that their positive personal
experience with the company is a good basis for investing.
Your analysis of the company is based on the financials recently released and a
discussion of how one might think about value a company like this. To calculate the
growth rate in earnings of the company, let’s look at this example. Let’s assume that the
earnings per share (EPS) of BookBusiness, Inc. is as follows:

Year    EPS
2015:  4.60
2014:  4.25
2013:  3.90
2012:  3.46
2011:  2.83
2010:  2.10

A. First explain the company’s historical earnings growth rates. From your historical
and qualitative analysis, what do you think will be the rate of growth for the company
in future?

B. You have observed that the rate of growth in earnings implied by the company’s P/E
is higher than what the company reported for the past two fiscal years. Can any
company sustain such a high rate of earnings growth over the long term?
C. Read the attached Wall Street Journal article about investment valuation. Do you or
do you not agree that the company’s valuation is a reasonable assessment of its futue
earnings potential?
D. What is your recommendation to Ken and Barbie Anderson. Should they purchase
the BookBusiness, Inc. IPO shares?