Bob and Joe are estimating the intrinsic value for Tesla stocks. They have the same expectations...

Bob and Joe are estimating the intrinsic value for Tesla stocks. They have the same expectations about the expected future cash flows and required rate of return for Tesla and agree that the company has a lot of potential in the long run. Bob plans to hold Tesla for 10 year but Joe plans to hold Tesla for 1 years. Compared to Joe, Bob will most likely estimate a:

a. lower intrinsic value

b. similar intrinsic value

c. higher intrinsic value

Solutions

Expert Solution

Joe will be most likely estimating a lower intrinsic value because he is achieving his target in just one year and Bob will be estimating high evaluation for Tesla because he will take a 10 year time in order to achieve the target.

Correct answer will be option( C) higher intrinsic value.

jeff jeffy answered 2 years ago

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