Stock valuation?

Question

8. A firm has experienced a high growth rate in its dividends of 15% for the last 10 years. It expects that rate of growth to continue for one more year, at the end of which total dividends of $500,000 are expected to be paid. Subsequently, the dividend growth rate is expected to moderate to 6%. The firm's cost of equity in both the high and low growth periods is 11%. Calculate the present value of the equity of the firm.

Answer 1

Again with the homework questions! You know, when the world economy tanks it you people who go to jail because you sought out short cuts all your life at the expense of naive investors who put their trust in dunder heads like you. It's a good thing for you I don't know where your going to school. I'd have them retest you on every exam you ever took. Go away! Try reading the book, try study hall, anything but waisting our time on Q&A.

Answer 2

Homework huh?

The present value of the company is always what people are willing to pay for it today.  You can find this on the stock listings every day.

If you are planning to buy the stock, you should be thinking "future value" when you sell it.  It takes more than math to make this judgment.

Answer 3

That is not the stock valuation, that is some sort of exercise in an economics class.  The value of the stock can be found in the market every day.  That is the only value of the stock - what folks will pay for it or sell it for.  Psychology is a lot more important than mathematics in the value of a stock.