Question

In: Finance

Why is it not feasible to use the dividend discount model in the valuation of a...

Why is it not feasible to use the dividend discount model in the valuation of a true growth company?
Requirements: 250 words

Solutions

Expert Solution


Related Solutions

Explain the dividend discount model as a basis for stock valuation, including a example in your...
Explain the dividend discount model as a basis for stock valuation, including a example in your initial post. What are the challenges of predicting future dividends, and what other factors affecting stock price are not accounted for in the dividend discount model?  
Formally derive and discuss the dividend discount model used for the valuation of common stocks
Formally derive and discuss the dividend discount model used for the valuation of common stocks
So called “H-Model” in stock valuation is a variant of the following model. 3-stage dividend discount...
So called “H-Model” in stock valuation is a variant of the following model. 3-stage dividend discount model (DDM) 2-stage DDM the Gordon model
According to the dividend discount model of stock valuation, holding other factors constant an decrease in...
According to the dividend discount model of stock valuation, holding other factors constant an decrease in investors required rate of return for a stock increases the stock's price.
For what type of firms is a Discounted Cash Flow (DCF) or Dividend Discount Model valuation...
For what type of firms is a Discounted Cash Flow (DCF) or Dividend Discount Model valuation technique most appropriate? What would be the challenge of using a DCF or DDM approach to value a technology company?
We use the dividend valuation model to value the price of the stock. As an investor...
We use the dividend valuation model to value the price of the stock. As an investor how do you get value by investing in a stock? Why does the stock valuation technique discussed in the module making sense to you or why not? What about the stock you invested never paid a dividend?
Authors such as Fama and French use the dividend discount model in order to study the...
Authors such as Fama and French use the dividend discount model in order to study the equity premium puzzle. While it surely has its drawbacks, the attractiveness of the dividend discount model stems from its solid consideration of (answer)
Authors such as Fama and French use the dividend discount model in order to study the...
Authors such as Fama and French use the dividend discount model in order to study the equity premium puzzle. While it surely has its drawbacks, the attractiveness of the dividend discount model stems from its solid consideration of Answer
In practice, the use of the dividend discount model is refined from the method presented in...
In practice, the use of the dividend discount model is refined from the method presented in the textbook. Many analysts will estimate the dividend for the next 5 years and then estimate a perpetual growth rate at some point in the future, typically 10 years. Rather than have the dividend growth fall dramatically from the fast growth period to the perpetual growth period, linear interpolation is applied. That is, the dividend growth is projected to fall by an equal amount...
Explain the difference between using the zero-growth dividend valuation model and the constant-growth dividend valuation model...
Explain the difference between using the zero-growth dividend valuation model and the constant-growth dividend valuation model when finding the intrinsic value of common stock and preferred stock ? How does adding a growth rate to the valuation process affect the intrinsic value?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT