暨南大学管理学院财务学管理课件Chapter 6 Stock Valuation.ppt

Constant Growth Model Assumes common stock dividends will grow at a constant rate into the future. Constant Growth Model Assumes common stock dividends will grow at a constant rate into the future. Vcs = D1 kcs - g Constant Growth Model Assumes common stock dividends will grow at a constant rate into the future. D1 = the dividend at the end of period 1. kcs = the required return on the common stock. g = the constant, annual dividend growth rate. Vcs = D1 kcs - g Example XYZ stock recently paid a $5.00 dividend. The dividend is expected to grow at 10% per year indefinitely. What would we be willing to pay if our required return on XYZ stock is 15%? Example XYZ stock recently paid a $5.00 dividend. The dividend is expected to grow at 10% per year indefinitely. What would we be willing to pay if our required return on XYZ stock is 15%? D0 = $5, so D1 = 5 (1.10) = $5.50 Example XYZ stock recently paid a $5.00 dividend. The dividend is expected to grow at 10% per year indefinitely. What would we be willing to pay if our required return on XYZ stock is 15%? Vcs = Example XYZ stock recently paid a $5.00 dividend. The dividend is expected to grow at 10% per year indefinitely. What would we be willing to pay if our required return on XYZ stock is 15%? Vcs = = D1 kcs - g Example XYZ stock recently paid a $5.00 dividend. The dividend is expected to grow at 10% per year indefinitely. What would we be willing to pay if our required return on XYZ stock is 15%? Vcs = = = D1 5.50 kcs - g .15 - .10 Example XYZ stock recently paid a $5.00 dividend. The dividend is expected to grow at 10% per year indefinitely. What would we be willing to pay if our required return on XYZ stock is 15%? Vcs = = = $110 D1 5.50 kcs - g .15 - .10 Expected Return on Common Stock Just adjust the valuat