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Understanding Cost of Capital Essentials by avishek karmaker is a document available to read on EtoBox.
* D1 = $1 (expected dividend next year) * g = 5% annual growth rate * k = 10% required rate of return * Value of stock = D1 / (k - g) = $1 / (0.10 - 0.05) = $1 / 0.05 = $20 So according to the constant growth model, the estimated intrinsic value of XYZ Company stock is $20 per share.
- Author
- avishek karmaker
- Language
- EN