Dividend One Year from now (D1)
Dividend One Year from now (D1) = D0 x (1 + g)
= $3.12 per share x (1 + 0.12)
= $3.12 per share x 1.12
= $3.4944 per share
“Hence, the Dividend One Year from now (D1) will be $3.49”
Horizon Value (P1)
As per Capital Assets Pricing Model (CAPM), Cost of Equity (Ke) is calculated by using the following formula
Cost of Equity (Ke) = Rf + [Beta x Market Risk Premium]
= 3.00% + [1.10 x 3.60%]
= 3.00% + 3.96%
= 6.96%
Horizon Value (P1) = D1(1 + g) / (Ke – g)
= $3.4944(1 + 0.0240) / (0.0696 – 0.0240)
= $3.5783 / 0.0456
= $78.47 per share
“Hence, the Horizon Value (P1) will be $78.47”
Intrinsic Value of Portman’s Stock
Intrinsic Value of Portman’s Stock = D1/(1 + r)1 + Horizon Value/(1 + r)1
= $3.4944/(1 + 0.0696)1 + $78.47/(1 + 0.0696)1
= [$3.4944 / 1.0696] + [$78.47 / 1.0696]
= $3.27 + $73.36
= $76.63 per share
“Hence, the Intrinsic Value of Portman’s Stock will be $76.63”
Expected Dividend Yield for Portman’s Stock
Expected Dividend Yield for Portman’s Stock = [D1 / P0] x 100
= [$3.4944 / $76.63] x 100
= 4.56%
“The Expected Dividend Yield for Portman’s Stock will be 4.56%”
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead...
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock Consider the case of Portman Industries: Portman Industries just paid a dividend of $3.12 per share. The company...
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries: Portman Industries just paid a dividend of $2.16 per share....
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $3.12 per share. The company...
7. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $3.12 per share. The company...
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.88 per share. The company...
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.40 per share. The company...
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.92 per share. The company...
8. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.44 per share. The company...
3. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.88 per share. The company...
3. Nonconstant growth stock As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.88 per share. The company...