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SECURITIES: STOCKS
ACC09 FINANCIAL MANAGEMENT
PART 2
VALUE OF ASSET
present value of all the
assets future cash flows
VALUE OF STOCK:
DIVIDEND GROWTH
MODEL
Total Return =
Dividend Yield + Capital
Yield
Total Return =
D1 /P0 + (P1 P0)/P0
ks = D1 /P0 + g
EXERCISE 1
EXERCISE 2
EXERCISE 3
EXERCISE 5
Examine the value of the firm based on the priceearnings (P/E) ratio model. Since the company is
privately traded (not in the public stock market),
you will get your anticipated P/E ratio by taking
the average value of five publicly traded chemical
companies.
P/E Ratio:
Dow Chemical 15
Du Pont
18
Georgia Gulf 7
3M
19
Olin Corp.
21
Assume Dunning Chemical has earnings
per share of P2.10. What is the stock