Determine expected future stream of dividends

Reference no: EM1350717

In 1965, Warren Buffett acquired control of a New England textile business called Berkshire Hathaway for about $10 a share. Today the stock sells for around $135,000 a share and Mr. Buffett is the second richest person in America. The stock has never paid a dividend. How does this amazing success fit the theory that the value of a stock is based on the present value of the expected future stream of dividends? What does the future holds for the company?

In an age of hi-tech why did he recently buy the Vurlingotn Northern Roailroad for $44 billion? How will the company fare after his inevitable departure?

Reference no: EM1350717

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