Respond to the following:

The differing valuations of Vegas Chips is due to the models each analyst used in their reporting. The Analyst responsible for Report A, made the assumption that all profits would be paid out to stockholders, with no money being funneled back to the business for future growth. Report B uses a more balanced approach to its valuation, assuming that growth will be steady and consistent, assigning only 40% of earnings to dividends. The third analyst, responsible for report C, also assigns 60% of earnings toward growth and improvement through a variable growth model, expecting high initial growth, but leveling out after a time.

When looking to gain confidence in the projections, there is no such thing as too much information. Looking over the income statements, asking questions around other variables and the business plan. Conducting a SWOT analysis to evaluate threats that could impact the growth plan and revenue could also help solidify confidence in the projections.