Table of Contents
Stock Valuation
I. Horizon Irrelevance
Horizon #1: (own stock forever) Value = PV(future dividends
Horizon #2: (own stock for one year) Value=PV(next year’s dividends and price)
Results:
Horizon #2: (own stock for one year)
Horizon #2: (own stock for one year)
Horizon #2: (own stock for one year)
Horizon #2: (own stock for one year)
Horizon #2: (own stock for one year)
Horizon #2: (own stock for one year)
Conclusion: In efficient markets, regardless of investors’ horizons, the current price of stock will equal the present value of future dividends
II. Fundamental Stock Valuation
Future Dividends - Constant Growth
Future Dividend - Constant Growth
Future Dividend - Constant Growth
Future Dividend - Constant Growth
Future Dividend - Constant Growth
Future Dividend - Constant Growth
Future Dividend - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
II. Fundamental Stock Valuation - Constant Growth
An Alternative Approach
PV(growing perpetuity) - formula derivation
PV(growing perpetuity) - formula derivation
PPT Slide
PV(growing perpetuity) - formula derivation
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