Search results
Results from the WOW.Com Content Network
The dividend discount model is a way of valuing a company based on the theory that a stock is worth the discounted sum of all of its future dividend payments. In other words, it is used to value stocks based on the net present value of the future dividends. Assume that each stock of the company pays a dividend Dt at the end of every year, t ...
The dividend discount model is illustrated by the following equation: Where. D is the expected dividend in period t. t is the time period. k is the discount rate or the required rate of return . Since the price of a stock is its value per share, the dividend discount model can be used to value the stock of a dividend paying company.
Which of the following firms would be appropriately valued using the constant growth dividend discount model? A) An auto manufacturer. B) A biotechnology firm in existence for two years. C) A producer of bread and snack foods. D) A new start - up wireless service provider.
Finance questions and answers. The FI Corporation's dividends per share are expected to grow indefinitely by 7% per year. a. If this year’s year-end dividend is $8 and the market capitalization rate is 12% per year, what must the current stock price be according to the dividend discount model? b. If the expected earnings per share are $15 ...
Step 1. The investors would like to shift from stocks to commodities. Now the stocks will command higher ris... Based on the dividend-discount model, what do you think would happen to stock prices if there were a decrease in the perceived riskiness of commodities? If investors perceive commodities are less risky, then the relative riskiness of ...
Finance expert. As per the dividend discount model, the stock price is equal to the present value of dividends expected, plus the present value price at which the stock is sold. It is assumed …. View the full answer.
Finance questions and answers. 1) Use the Dividend Discount Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $19.84 per share in one year. ELO shares are currently trading for $280.62 on the NYSE, and the expected annual rate of return for ELO shares is 10.82%.
Finance. Finance questions and answers. 1. Dividend discount model: Company X is expected to pay an end-of-year dividend of $8 a share. After the dividend, its stock is expected to sell at $105. If the market capitalization rate is 10%, what is the current stock price? 2. Dividend discount model: Consider the following three stocks: a) Stock A ...
Our expert help has broken down your problem into an easy-to-learn solution you can count on. See Answer. Question: Suppose D2= $3.25, R = 7.5%, and g = 2.5%. Compute the value of the stock in Period 4, using the constant-growth dividend discount model. Group of answer choices $ 71.75 $ 73.54 $ 70.00 $ 68.29.
1. The advantage of the dividend discount model is that: 2. Which of the following descriptions of the free cash flow to the firm (FCFF) model is inaccurate? With the FCFF valuation model, firm value is the sum of the present value of horizon and terminal period free cash flows. FCFF is defined as NOPAT less the decrease in NOA during the period.