arutjunjan arutjunjan

15-10-2022
Business

Answered

Consider a company, which stock is currently trading at €8.50. The company has just paid a
dividend of €0.60 per share. Suppose that the future dividends (per share) of this company are expected
to grow at constant rate of 4%. Suppose that your required rate of return in case of this company is 10%.
Estimate the value of this company’s stock by using the Gordon Growth Model and judge whether this
company’s stock is currently undervalued, fairly valued, or overvalued in the market.

Answer :

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