Based on the information estimate cvxs intrinsic value

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Assignment:

1. CVX Tech is known for creating innovative technology solutions for electric vehicle manufactures. Three years ago, the company has raised $80 million through an IPO. However, it has not earned any profit so far. Analysts are expecting that CVX will earn a profit of 80 cents per share next year. The forecasted earnings per share for following two years are $1.2 and $1.5. Then onwards the firm's dividends are expected to grow at a constant rate. The firm's ROE is expected to be 20% and the firm plans to to distribute about 40% of its earnings as dividends in future. CVX's cost of equity is estimated to be 15% pa.

2. Based on the information estimate CVX's intrinsic value using a multistage dividend growth model. Show your calculations.

3. Do you think a dividend discount model is appropriate for valuation of a firm like CVX? Briefly discuss your answer with explanation.

Reference no: EM133269689

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