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Two Stage growth model

Carl Zeiss is currently trading at $19.10 and has


currently paid a dividend of $0.14. An analyst believes
that the company will grow by 15% during next 10
years and thereafter it will grow @ 8% forever. If beta of
Carl Zeiss is 0.89 and risk free rate is 4.5% and equity
risk premium is 5.8%, estimate the value of the
company

H model
A company is expected to have a dividend growth rate
of 24% which is expected to decline linearly to a
perpetual rate of 6% per annum in next 6 yrs. Current
dividend is $1.37 and required return on equity is 10%,
estimate the value of the stock.

Three Stage dividend discount


model
Current dividend paid by IBM is $1.60 per year, required
return on equity is 12%. Dividends are expected to grow
at 14% for next two years, 12% for next 5 yrs and
10.2% thereafter, calculate the expected price of IBM

Three Stage dividend discount


model
Current dividend paid by a company is $ 0.46 per year,
required return on equity is 10%. Dividends are
expected to grow at 12% for next five years and decline
to 7.5%, 10 yrs later when the company becomes
mature.

Two Stage FCFF Model

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