The dividend-discount model can be used to determine the, Ask an Expert

Finance

Determine the Value of General Electric's (GE) Equity:

1. The Dividend-Discount Model can be used to determine the value of a firm's equity-i.e., the current price of a share of stock. We will use this model to estimate the value of a share of your firm's stock and compare this estimate to the current market value of this firm's stock.

2. Estimate the firm's stock price using the Dividend-Discount Model:

a. Use an investment source-e.g., www.yahoofinance.com , www.morningstar.com etc, to find the following information:

i. current dividend

ii. analyst's estimated growth rate for the next 5 or 10 years

b. Use your estimate of the cost of equity in the WACC for the rE part of your formula

c. Combine the above information into the Dividend-Discount Model

3. Compare your result to the current market price of your firm's stock. Describe, discuss, and analyze how they compare. Based on your knowledge of finance, how would you explain any differences your observe.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9678922

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