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In the text, we discussed using the discounted dividend model to estimate a stock’s intrinsic value. To keep things as simple as possible, let’s assume at first that XOM’s dividend is expected to grow at a constant rate of 5% annually over time. So, g = 5%. If so, the intrinsic value equals D 1 /(r s − g), where D 1 is the expected annual dividend 1 year from now, r s is the stock’s required rate of return, and g is the dividend’s constant growth rate. Go back to the summary (overview) screen and find XOM’s current dividend. Multiply this dividend by 1 + g to arrive at an estimate of D 1 .

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Fundamentals Of Financial Manageme...

10th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337902571
BuyFind

Fundamentals Of Financial Manageme...

10th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781337902571

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Chapter
Section
Chapter 9, Problem 5TCL
Textbook Problem

In the text, we discussed using the discounted dividend model to estimate a stock’s intrinsic value. To keep things as simple as possible, let’s assume at first that XOM’s dividend is expected to grow at a constant rate of 5% annually over time. So, g = 5%. If so, the intrinsic value equals D1/(rs − g), where D1 is the expected annual dividend 1 year from now, rs is the stock’s required rate of return, and g is the dividend’s constant growth rate. Go back to the summary (overview) screen and find XOM’s current dividend. Multiply this dividend by 1 + g to arrive at an estimate of D1.

Chapter 9, Problem 5TCL, In the text, we discussed using the discounted dividend model to estimate a stocks intrinsic value.

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Chapter 9 Solutions

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
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Ch. 9 - Discuss the similarities and differences between...Ch. 9 - This chapter discusses the discounted dividend and...Ch. 9 - How do non-operating assets impact a firms...Ch. 9 - DPS CALCULATION Weston Corporation just paid a...Ch. 9 - CONSTANT GROWTH VALUATION Tresnan Brothers is...Ch. 9 - CONSTANT GROWTH VALUATION Holtzman Clothierss...Ch. 9 - NONCONSTANT GROWTH VALUATION Holt Enterprises...Ch. 9 - CORPORATE VALUATION Scampini Technologies is...Ch. 9 - PREFERRED STOCK VALUATION Farley Inc. has...Ch. 9 - PREFERRED STOCK RATE OF RETURN What will be the...Ch. 9 - PREFERRED STOCK VALUATION Earley Corporation...Ch. 9 - PREFERRED STOCK RETURNS Avondale Aeronautics has...Ch. 9 - VALUATION OF A DECLINING GROWTH STOCK Maxwell...Ch. 9 - Suppose you believe that the economy is just...Ch. 9 - VALUATION OF A CONSTANT GROWTH STOCK Investors...Ch. 9 - CONSTANT GROWTH You are considering an investment...Ch. 9 - NONCONSTANT GROWTH Computech Corporation is...Ch. 9 - CORPORATE VALUATION Dantzler Corporation is a...Ch. 9 - NONCONSTANT GROWTH Carnes Cosmetics Co.s stock...Ch. 9 - CONSTANT GROWTH Your broker offers to sell you...Ch. 9 - NONCONSTANT GROWTH STOCK VALUATION Taussig...Ch. 9 - CORPORATE VALUATION Brandtly Industries invests a...Ch. 9 - CORPORATE VALUE MODEL Assume that today is...Ch. 9 - NONCONSTANT GROWTH Assume that it is now January...Ch. 9 - Comprehensive/Spreadsheet Problem NONCONSTANT...Ch. 9 - STOCK VALUATION Robert Balik and Carol Kiefer are...Ch. 9 - For purposes of this exercise, lets take a closer...Ch. 9 - Check recent headlines on the website to see the...Ch. 9 - To provide a starting point for gauging a companys...Ch. 9 - To put XOMs P/E ratio in perspective, it is useful...Ch. 9 - In the text, we discussed using the discounted...Ch. 9 - The required return on equity, rs, is the final...Ch. 9 - It is often useful to perform a sensitivity...Ch. 9 - Until now, we have assumed that XOMs dividend will...Ch. 9 - Finally, you can also use the information on the...

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