Question
In this project a group of two students are expected to value a company listed in Amman Stock Exchange and estimate its stock intrinsic value.
In this project a group of two students are expected to value a company listed in Amman Stock Exchange and estimate its stock intrinsic value. By being able to accurately estimate the value of the stock you will be able to decide if this stock is going to be good for investments (that is undervalued) or good for selling (overvalued). Since you have studied in the course more than one valuation technique, at least two techniques are expected to be used. Below are some examples of the techniques that you can use: 1. Discounted Cash Flow Valuation What is it: In discounted cash flow valuation, the value of an asset is the present value of the expected cash flows from the asset. Philosophical Basis: Every asset has an intrinsic value that can be estimated, based upon its characteristics in terms of cash flows, growth and risk. Information Needed: To use discounted cash flow valuation, you need to estimate the life of the asset to estimate the cash flows during the life of the asset to estimate the discount rate to apply to these cash flows to get present value Market Inefficiency: Markets are assumed to make mistakes in pricing assets across time, and are assumed to correct themselves over time, as new information comes out about assets. a. Dividend growth model The value of the stock is the present value of the future dividends expected to be generated by the stock. A stock whose dividends are expected to grow forever at a constant rate, g. D1 = D0 (1+g)1 D2 = D0 (1+g)2 Dt = D0 (1+g)t If g is constant, the dividend growth formula converges to:
i need help in this project plz
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