EQUITY VALUATION

EQUITY VALUATION Based on expected cash flow as represented with dividends: V-Dik or V=D)/kg) or V=SD)/(1+)*1+ [P://kg)/(1+x)" . Given rrr = 12% 3. No growth: dividend has been and expected to remain 52 per year What is the price of this stock? 4. Growth: recent $2 dividend is expected to grow by 6% (representing firm's growth) into the future What is the price of this stock? 5. Variable growth: new product should cnahle 12% growth for two years, then 8% for two years, thereafter competition will force the firm back to its competitive 3% growth What is the price of this stock