Problem on valuation concepts

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Reference no: EM13107845

The management and Directors of Google have stated that there is no plan for Google to ever pay dividends. Yet, the stock trades at a very high price in dollar terms (around $490 per share currently) and at a P/E of around 20.

Based on the valuation concepts discussed in the text, how can these values be justified by investors (investors must have done that because they are the value placed on Google shares by folks actually buying and selling the shares)?

How accurate can that justification be? What factors are likely cause errors in valuing Google stock?

Reference no: EM13107845

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