Discounted Cash Flow Valuation

Paskalis Glabadanidis

Chapter 2 in Absence of Arbitrage Valuation, 2014, pp 15-27 from Palgrave Macmillan

Abstract: Abstract The simplest version of the dividend discount model is most applicable to mature companies with stable earnings and dividends growing at relatively low rates in line with the growth in aggregate economic output. In this case, we can apply the growing perpetuity formula to the dividend per share, DPS0, forecast to grow at the rate of g in perpetuity with r e as the required rate of return on equity. This leads to the following intrinsic value per share: 2.1 V 0 E = D P S 0 ( 1 + g ) r e − g ]]

Keywords: Require Rate; Future Time Period; Expect Growth Rate; Future Dividend; Future Forecast (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1057/9781137372871_2

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