Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

9. Explain to your boss why the estimates from the two valuation methods differ. Specifically, address the assumptions implicit in the models themselves as well

9. Explain to your boss why the estimates from the two valuation methods differ.

Specifically, address the assumptions implicit in the models themselves as well as those you made in preparing your analysis.

Why do these estimates differ from the actual stock price of Columbia?

Current Price $90.1
Dividend Discount Model $93.68
Discounted Free Cash Flow $178.21

My guess is why it is different is because we had to make sure assumptions of the WACC (11%) and the tax rate which we made to 21%. (Is that correct?)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mergers Acquisitions And Other Restructuring Activities

Authors: Donald DePamphilis

9th Edition

0128016094, 978-0128016091

More Books

Students also viewed these Finance questions