--%>

How you can predict future evolution of value of shares

Could we suppose that, as we cannot predict the future evolution of the value of shares, a good estimation would be to consider this constant during the next five years?

E

Expert

Verified

Such affirmation is an error. The relation among the value of the shares of various years is: Et = Et-1 (1+Ket) – CFact. The shares value is constant (Et = Et-1) only when CFact = Et-1 Ket. It happens in non-growing perpetuities.

   Related Questions in Corporate Finance

  • Q : Explain merits and demerits of standard

    Explain merits and demerits of standard market practice to find the volatility as a function of underlying.

  • Q : Difference between capitalization and

    Is the difference for the value creation in a company among the market value of the shares (capitalization) and their book value a good measure since its foundation?

  • Q : Explain Value Chain Value Chain : The

    Value Chain: The value chain is a theory from business management that was first described and popularized Michel Porter in his 1985 best seller, Competitive Advantage: Creating and Sustaining Superior Performance.

  • Q : Relation between book value of shares

    Is the relation in between book value of shares or capitalization a good guide to investments?

  • Q : How can optimal capital structure be

    How can optimal capital structure be calculated?

  • Q : Problem on Decision variables A factory

    A factory has three distinct systems for making similar product: System 1: Worker runs 3 machines of type-A, each of which costs $20 per day to run, each generates 100 units per day and the worker is paid $40 per day.System 2

  • Q : Explain the working of breakthrough for

    Explain the working of breakthrough in low-discrepancy sequences used for option valuation.

  • Q : Operational efficiency and

    Distinguish between Operational efficiency and informational efficiency?

  • Q : Problem on raising new capital AB

    AB Corporation has 3 million shares of common stock selling at $19 each. It also contains $25 million in bonds with coupon rate of 8%, selling at par. AB requires $10 million in new capital that it can raise by selling stock at $18, or bonds at 9% interest. The expect

  • Q : Evaluating Beta of a Corporation

    Baldwin Corporation is planning to expand into the business of providing on-demand movies. Baldwin has debt-to-equity ratio of .25, its pretax cost of debt is 9%, and its marginal tax rate is 40%. The Harrington Corporation is already in the on-demand movie business,