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Larry and Curley are brothers. They're both serious investors, but they have different approaches to valuing stocks. Larry, the older brother, likes to use the
Larry and Curley are brothers. They're both serious investors, but they have different approaches to valuing stocks. Larry, the older brother, likes to use the dividend valuation model. Curley prefers the free cash flow to equity valuation model. As it turns out, right now, both of them are looking at the same stock American Home Care Products, Inc. (AHCP). The company has been listed on the NYSE for over 50 years and is widely regarded as a mature, rock-solid, dividend-paying stock. The brothers have gathered the following information about AHCPs stock: Current dividend (Do) $3.30/share Current free cash flow (FCFo) $1.0 million Expected growth rate of dividends and cash flows (g)-7% Required rate of return (r)-13% Shares outstanding 400,000 shares How would Larry and Curley each value this stock? The stock price from Larry's valuation iRound to the nearest cent.)
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