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Suppose we use constant growth model to evaluate the stock of a large company in China. The company has a cost of equity of 15%.
Suppose we use constant growth model to evaluate the stock of alarge company in China. The company has a cost of equity of 15%. Its sales have been growing at 10% a year for the past five years even though China's GDP has been growing at 6-7% over the past five years. Could we assume that the company will continue grow at 10% a year forever in the future? Why or why not?
large company in China. The company has a cost of equity of 15%. Its sales have
been growing at 10% a year for the past five years even though China's GDP has
been growing at 6-7% over the past five years. Could we assume that the company
will continue grow at 10% a year forever in the future? Why or why not?
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