Valuation methods, Financial Management

Assignment Help:

Valuation Methods:

  1. 2 - Year Method
  2. Perpetual Growth Method
  3. Constant Growth Method
  4. Zero Growth Method
  5. Growth Phases

Valuation Model:  'Constant Growth Method'

The value is given by,

 

à V = {D x (1 + g) / (Ke - g)}           where, V = intrinsic value

                                                                        D = dividend at time 't'

                                                                        Ke = expected rate of return

                                                                        g = constant growth rate of return

 

The constant growth model has been used as it best approximates the situation for stocks in this sector. Also, this helps in simple calculations.


Related Discussions:- Valuation methods

Decentralization, Decentralization This is a company power structure i...

Decentralization This is a company power structure in which authority and decision-making responsibility are diffused throughout various stages of an organization. Decentraliz

Explain swap dealer, Explain Swap Dealer A swap dealer is a market make...

Explain Swap Dealer A swap dealer is a market maker of swaps and predicts a risk position in matching opposite sides of a swap and in making sure that every counterparty fulfil

Explain the internalization theory of fdi, Normal 0 false fal...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Capitalization ratios, Capitalization ratios are used for determining the e...

Capitalization ratios are used for determining the extent to which the corporation is trading on its equity, and the resulting financial leverage. These ratios

Planning and controlling the various business activities , Explain and crit...

Explain and critically evaluate : a)  The relevance of committed fixed costs in deciding the optimal mix of products to maximum a company's profit and the importance of relevant

Techniques of inventory control, Examine the reasons for holding inventorie...

Examine the reasons for holding inventories by a firm & also discuss the techniques of inventory control

Call provisions, The issuer's right to call back the issue before the...

The issuer's right to call back the issue before the maturity date is referred to as a "call provision". In case of asset-backed securities, the trustee is grante

The main characteristics of debt and equity, QUESTION i) Distinguish be...

QUESTION i) Distinguish between intermediated and market finance using illustrative examples. ii) Differentiate between the main characteristics of Debt and Equity. iii)

Explain terminal value calculation at end of forecast period, Explain the t...

Explain the terminal value calculation at the end of the forecast period.  Why is it necessary? The organization whose business operation is being valued is not supposed to sudde

Capital investment decision-making process , Identify and explain the key s...

Identify and explain the key stages in the capital investment decision-making process and the role of investment appraisal in this process.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd