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Stock value using PS ratio to estimate selling price An investor is going to buy stock, collect dividend payments for five years, then sell the
Stock value using PS ratio to estimate selling price
An investor is going to buy stock, collect dividend payments for five years, then sell the stock. The investor demands a certain percent return on investment. Based on the following details, what is the maximum price the investor should be willing to pay for this stock?
Scenario A common stock:
Dividend expected at end of first year $
Expected growth rate of dividends until end of year
Revenue $ million at end of year
Shares outstanding shares
PS Price to Sales ratio expected at end of year times
Required rate of return
Selling price at end of year
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