Solution-Determining the kind of valuation model

Determining the kind of valuation model

Assignment Help Electrical Engineering

Reference no: EM132523821

Case Information:

The current stock price (P0): $80 per share

The average growth rate of the dividend during the past ten years: 12% per year

The required return on the stock: 8% per year

The company's return on equity is 20% and they return 70% of the earnings while paying out the remainder as dividends.

The estimated earnings for the next year (E1) is $4 per share. The estimated earings per share for the following two years are: E2 = $4.2 and E3 = $4.6.

A) What kind of valuation model you can use to value Stock C? Do you need to make any assumption to value this stock based on the given information? Explain. (Hint: Use one of the four models you learned in the Bloomberg Equity Valuation cases of GE and Disney.)

Answer:

B) Estimate the intrinsic value of the stock and show your calculations.

Answer: Intrinsic value = $______________ per share

Reference no: EM132523821

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Determining the kind of valuation model

Reference no: EM132523821

Reference no: EM132523821

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