The required rate of return on equity used as an input to the dividend discount model is influenced by each of the following factors EXCEPT: A. the expected inflation rate. B. the stock’s appropriate risk premium. C. the stock’s D. ividend payout ratio. ...
The third step is to calculate the fair value of the stock. So, Marion plugs in the numbers and finds thatP = D1 / (r – g) = $1.32 / (10% – 4%) = $1.32 / 6% = $22Therefore, the fair value of the stock based on the dividend discount model is $22. If the stock ...
Suppose you want to calculate the fair value of a stock using the Dividend Discount Model (which is explained in significantly more detail in thebook), and you estimate that the dividend will grow by 5% per year, and you’re using 12% as your discount rate. First, you put the simple i...
The required rate of return on equity used as an input to the dividend discount model is influenced by each of the following factors EXCEPT:A. the stock's appropriate risk premium.B. the stock's dividend payout ratio.C. the expected inflation rate. 正确答案:B 分享到: 答案解析: A stock...
This note focuses on the dividend discount model (DDM), or Gordon Growth Model, as it is sometimes called. In practice, the DDM appears in many forms. The note examines its role in estimating the intrinsic value of an equity security and as a model for estimating the required return on ...
Dividend Growth Model Dividend discount model is one of the approaches used to calculate the cost of equity capital. According to this model, the cost of equity is the discount rate that equates the present value of all dividends expected to be received in future wi...
Using the dividend discount model, what is the cost of equity capital for Zeller Mining if the company will pay a dividend of C2.30 next year, has a payout ratio of 30 percent, a return on equity (ROE) of 15 percent, and a stock price of C45? A.9.61 percent B.10.50 percent C.15...
The dividend discount model, shortly characterized at the beginning of thepaper, belong among many models used to stock valuation. Various situationsassociated with zero, constant or variable dividend growth rate are described,including case of zero-dividend firm. The aim of the paper is to present...
Proponents of the dividend discount model say that only consideration of futurecash dividendscan give you a reliable estimate of a company'sintrinsic value. Buying a stock for any other reason—say, paying 20 times the company's earnings today because somebody will pay 30 times tomorrow—is mere...
In this article, the authors show that the dividend discount model can be derived using the basic intertemporal consumption model that is introduced in a typical intermediate microeconomics course. This result will be of use to instructors who teach microeconomics to finance students in that it ...