- What is the intrinsic value of stock of company X at the beginning of the year (1st of January, 1st year) if: - the company pays out the dividend on every 31st of December - over the next 3 years the dividend will equal 1,5 / per share - from the 4th year the dividend will equal 2,2 / per share - investors require the rate of return of 7% per year 2. The comapny X last year’s net profit was 2,6 mln . Similar companies Y and Z had net profits of - 1,3 mln and 1,8 mln . Share capital/shareholders' equity of company Y and Z consists of 0,7 mln and 0,9 mln shares. Current market price of shares of companies Y and Z are equal to 29 and 55 $. What is the market price of share of company X if it’s Share capital/shareholders’ equity consists of 0,6 mln shares?
anyone has any idea ?
would really use some help
- From the fourth year, take g=0 and k=7 and substitute in D1/(k-g), and for the previous years, discount the dividend values by taking discount value as 7%.
Remember, to calculate the discounted value for the perpetual dividend from the fourth year, the discounting factor will be 1.07^3