We are supposed to calculate theoretical price of share

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Reference no: EM13380585

We are supposed to calculate theoretical price of share from a company using DDM using below steps:

1. Using the past 7 years of dividends of a company, what is the best method to estimate its dividend growth rate (g) as a proxy (because the paid dividend growth of each year is sometimes + and -)? and why it's the best method ?

2. What factors to compare in finding several companies from very closely related sector to that company? Is it EV, EV/EBITDA, or any other ratio?

3. How to determine cost of equity using comparative earning methodology using ROE of above related companies?

4. How to estimate the next year dividend (D)?

Reference no: EM13380585

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