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Find a publicly traded stock that pays a dividend. Find an estimate of cash flow (you can use EBITDA or Levered Cash flow - but make sure it is adjusted to be a per share calculation), and

(a) estimate the intrinsic value of the stock using dividends assuming a six percent constant growth rate and that the discount rate is 8% for year 1, 9% for year 2 and 10% in year 3 and after.

(b) estimate the intrinsic value of the stock using cash flows assuming a six percent constant growth rate and that the discount rate is 8% for year 1, 9% for year 2 and 10% in year 3 and after. 

(c) compare your results with the actual stock price. Which is closer to the actual price?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91375944

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