Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Elementary Statistics

Authors: Mario F. Triola

3rd Canadian Edition

032122597X, 978-0321225979

Students also viewed these Finance questions