Question
Use the dividend-discount model model to estimate the value of a share of your Netflixs' stock and compare this estimate to the current market value.
Use the dividend-discount model model to estimate the value of a share of your Netflixs' stock and compare this estimate to the current market value. To do this, you will need to do the following:
Estimate the firms stock price using the dividend-discount model: Use an investment source and find: 1) the current dividend; 2) analysts estimate growth rate for the next five to ten years; 3) an alternative growth estimate using the firms historical growth rate or the formula "g=ROE x b".
Use your estimate of the cost of equity in the WACC for the rE part of your formula: Combine the above information into the dividend-discount model (DDM).
Compare your result to the current market price of your firms stock. Provide analysis and an explanation of how they compare and explain any differences you observe.
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