Describe the dividend-discount model

Assignment Help Financial Management

Reference no: EM13214817

Determine the Value of General Electric's (GE) Equity:

1. The Dividend-Discount Model can be used to determine the value of a firm's equity-i.e., the current price of a share of stock. We will use this model to estimate the value of a share of your firm's stock and compare this estimate to the current market value of this firm's stock.

2. Estimate the firm's stock price using the Dividend-Discount Model:

a. Use an investment source-e.g., www.yahoofinance.com , www.morningstar.com etc, to find the following information:

i. current dividend

ii. analyst's estimated growth rate for the next 5 or 10 years

b. Use your estimate of the cost of equity in the WACC for the rE part of your formula

c. Combine the above information into the Dividend-Discount Model

3. Compare your result to the current market price of your firm's stock. Describe, discuss, and analyze how they compare. Based on your knowledge of finance, how would you explain any differences your observe.

Reference no: EM13214817

Questions Cloud

What is the radius of the curve : A car with a mass of 1,200 kilograms is moving around a circular curve at a uniform velocity of 20 meters per second. the centripetel force on the car is 6,000 newtons. what is the radius of the curve?

What are the most distinctive landmarks of african culture : What are the most distinctive landmarks of African culture? How do these reflect the preservation of cultural values? Explain why we call the Age of the Baroque an era of piety and extravagance? Use specific examples from the readings to support your..

Sngry condition support the idea : The results of Schachterand Singer's experiment in which participants were injected with epinephrine just befor spending time in a happy condition or an sngry condition support the idea that

Develop reason in order to achieve lucid summations : What people need is a quality of mind that will help them to use information and to develop reason in order to achieve lucid summations of what is going on in the world and of what may be happening within themselves.

Describe the dividend-discount model : The Dividend-Discount Model can be used to determine the value of a firm's equity-i.e., the current price of a share of stock. We will use this model to estimate the value of a share of your firm's stock and compare this estimate to the current ma..

The most striking cloudmark in jupiter''s atmosphere : The most striking "cloudmark" in Jupiter's atmosphere is the

What would joy advertising expenditure : What would be the effect of a $5000 increase in the competitors' advertisement expenditure and outlet demand curve c) What would joy's advertising expenditure have to be to counteract this effect?

Prepare a cost of production report for sifting department : Lily Flour Company manufactures flour by a series of three processes, beginning with wheat being introduced in the Milling Department. From the Milling Department, the materials pass through the Sifting and Packaging departments, emerging as a pac..

Compression of a gaussian function : Prove that the two-dimensional compression of a Gaussian function in three dimensions is still a Gaussian.

User Account

All Pages