arutjunjan arutjunjan

15-10-2022
Business

Answered

Consider a company, which stock is currently trading at €8.00. The company has just paid a
dividend of €0.30 per share. You expect the dividend to increase by 10% for the next two years and then
increase by 5% per year forever. Suppose that your required return in case of this company is 8%.
Estimate the value of this company’s stock by using a two-stage Dividend Discount Model and judge
whether this company’s stock is undervalued, fairly valued, or overvalued.

Answer :

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