Beruflich Dokumente
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Stock Valuations
Dividends Discount Model
Calculating value for a one-period DDM
BuyBest shares are expected to pay a dividend
at the end of the year of €1.25. The analyst
estimates the required return to be 8% and
the expected price at the end of the year to
be €28.00. The current price is €26.00.
•Calculate the value of the shares today.
•Determine whether BuyBest is overvalued,
undervalued, or properly valued.
Calculating value for a one-period DDM
BuyBest shares are expected to pay a dividend at the end of the
year of €1.25. The analyst estimates the required return to be 8%
and the expected price at the end of the year to be €28.00. The
current price is €26.00. Calculate the value of the shares today.
Determine whether BuyBest is overvalued, undervalued, or
properly valued.
Answer:
The current value of the shares according to the DDM is
equal to:
V0 = ( €1.25 + €28.00) / 1.08 = €27.08
•Then the growth rate reverts to long run stable rate (the
second stage)
Valuation Using Two Stage Model
Valuation Using Two Stage Model
Calculate the Stock Value Using Two Stage Model
Sea Island Recreation currently pays a dividend of 1$. An
Analyst forecasts growth of 10% for next three years
followed by the growth of 4% thereafter. The required
return is 12%. Calculate the value per share.
Calculate the Stock Value Using Two Stage Model
Sea Island Recreation currently pays a dividend of 1$. An
Analyst forecasts growth of 10% for next three years
followed by the growth of 4% thereafter. The required
return is 12%. Calculate the value per share.
Calculate the Stock Value Using Two Stage Model
Valuing Non-Dividend Paying Stock
Valuing Non-Dividend Paying Stock
Calculating Expected Return
Calculating Expected Return Using GGM