--%>

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 : Regarding WACC Regarding the WACC which

    Regarding the WACC which has to be applied to a project, must it be an expected return, the average historical return or an opportunity cost on similar projects?

  • Q : Calculate a positive net income for a

    Is this possible for a company with a positive net income and that does not distribute dividends to get itself in suspension of payments?

  • Q : How present value of tax shields be

    I have two valuations of the company that we set as an objective. Within one of them, the present value of tax shields (D Kd T) computed using Ku (required return to unlevered equity) and, in one, by using Kd (required return to debt). The second valuation is too high

  • Q : Expected return and standard deviation

    If an investor is considered to be risk-averse, what is his/her attitude towards expected return and standard deviation?

  • Q : Data Case Please Assist with the

    Please Assist with the attached Data Case Assignment

  • Q : Explain the Monte Carlo evaluation of

    Explain the Monte Carlo evaluation of integrals.

  • Q : Explain influences of financial

    Does financial leverage (i.e. debt) have any influence on the Free Cash Flow, upon the Cash Flow to Shareholders, upon the growth of the company and upon the value of the shares?

  • Q : Historical return on stock market and

    The market risk premium is difference among the historical return upon the stock market and the risk-free rate, for yearly. Why is this negative for some years?

  • Q : Problem on leveraged beta AB

    AB Restaurants has debt/equity ratio .25, and its leveraged beta is 1.5. Its tax rate is 30%, and its cost of equity is 15%. The risk-free rate is 5%. CD Restaurants has debt/equity ratio .4, and tax rate 35%. Find the cost of equity for CD.

  • Q : Types of agency Types of agency :

    Types of agency: Specific types of Agency include:A) Auctioneers: Are an agent of vendor until the fall of the hammer when they become an agent for the purchaser.B)

    Discover Q & A

    Leading Solution Library
    Avail More Than 1453168 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads
    No hassle, Instant Access
    Start Discovering

    18,76,764

    1930196
    Asked

    3,689

    Active Tutors

    1453168

    Questions
    Answered

    Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

    Submit Assignment

    ©TutorsGlobe All rights reserved 2022-2023.