Question
The company is woolworth limited. beta is 0.58, discount rate is 6%,market risk premium is 6.5% 4. Using a constant growth rate of 8% pa.
The company is woolworth limited. beta is 0.58, discount rate is 6%,market risk premium is 6.5%
4. Using a constant growth rate of 8% pa. (commencing immediately) in the constant dividend growth model, determine a current stock price for your company.). 5. Suppose that the previous dividend growth rate was only expected to apply for 5 years before reverting to a long-term growth rate consistent with the forecast inflation rate. Demonstrate the impact this would have upon your stock valuation. 6. Now disregard the previous growth forecasts. Using your own variables, determine a current stock price for the company that you think might represent something close to its fair value. Why do you believe the variables you have chosen give a more appropriate value than those used in questions 4 and 5? Discuss.
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