Illustrates the Gordon and Shapiro formula
What is the importance and the utility of the given formula: Ke = DIV(1+g)/P + g?
What is the importance and the utility of the given formula:
Ke = DIV(1+g)/P + g?
Expert
The given expression Ke = DIV(1+g)/P + g arrives from the Gordon and Shapiro formula to value shares as: P = DIV(1+g)/(Ke–g). In such formulas, P and DIV are identified and Ke and g are not identified. Some people take like g as expected growth of dividends the average of expectations of analysts, and after that they compute Ke (Ke computed in such way is usually termed as implicit).
But Ke computed in this way is just one of several that can be computed. The formula permits us to acquire pairs (Ke, g) which satisfy the equation.
PV of dividends: Cortez, Inc., is expecting to pay out a dividend of $2.50 next year. After that it expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends over the next five-year period if the required rate of return is 10 percent?
A company currently pays a dividend of $3.75 per share, D0 = 3.75. It is estimated that the company's dividend will grow at a rate of 15% percent per year for the next 2 years, then the dividend will grow at a constant rate of 7% the
You have joined Zurich Pvt. Ltd as a Finance manager. You are given the following information: Zurich Pvt Ltd. is a diversified manufacturing firm dealing with electrical appliances. In 2012, the firm reported an operating income of Rs. 857.60 million and faced a tax rate of 35% on income. The firm
A court assigned to me (as an auditor and economist) a valuation of a market butcher’s. The butcher’s did not give any simple income statements or any valuable information that I could use in my valuation. This is a small business with just two workers, th
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Are there any methods to analyze and to value seasonal businesses?
Below are the three-month HIBOR and three-year EFN futures (that is, Exchange Fund Note) prices for the September 2010 contracts.a) Find out the HIBOR in three-months for settling the future contract utilizing the quotation on August 16. Q : Problem on optimal capital structure XYZ Company has debt/assets ratio 50%, that is too high and it must be at 45% to be optimal. This debt reduction must also reduce the bankruptcy costs by $30 million. At present, XYZ has 5 million shares of common stock selling at $50 each. The tax rate of XYZ is 30%.
XYZ Company has debt/assets ratio 50%, that is too high and it must be at 45% to be optimal. This debt reduction must also reduce the bankruptcy costs by $30 million. At present, XYZ has 5 million shares of common stock selling at $50 each. The tax rate of XYZ is 30%.
Explain the result of volatility structure.
Is this possible to make money in the stock market while the quotations are going down? And what is credit sale?
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