A common stock has expected year-end dividend is D1 = ₱1.60, its required return is rs = 11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is the expected stock price in 7 years, i.e., what is P7?
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
A common stock has expected year-end dividend is D1 = ₱1.60, its required return is rs = 11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is the expected stock price in 7 years, i.e., what is P7?
The firm
what is the horizon value, in millions at t = 3?
The firm’s free cash flow during the just-ended year (t = 0) was ₱ 100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm’s value
of operations, in millions?
The projected cash flow for the next year is ₱ 1,000,000, and FCF is expected to grow at a constant rate of 6%. If the company’s weighted average cost of capital is 12%, what is the value of its operations?
The firm forecasts that its free cash flow in the coming year, i.e., at t = 1, will be ₱ 10 million, but its FCF at t = 2 will be ₱ 20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the
weighted average cost of capital is 14%, what is the firm’s value of operations, in millions?
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