When it comes to chapter 2 of equity, I find it really time-consuming when you tried to calculate the implied required return in multistage model. Is anyone using any mathematical tricks instead of replacing numbers between options or calculating every single step and square root it. I will be very grateful if you can share:grin:
You should be able to use the IRR function on your calculator. You have the cash flows.
For example if I have a current dividend, let’s say d0=usd 0.5 and each year the dividend raised at a growth rate of 8% till year 4 and its stock price is 30.56 without terminal value P3 and I mean when you perform to find x on calculator, it assumes that NPV would make the IRR become 0 but the stock price is 30.56 then I will calculate wrongly required rate of return, and if I use the I/Y approach like it frequently uses for bond but bond has the same cash flow but stock has different cash flow, so do we need to use any other mathematical tricks or any other ways to use calculator to calculate R. If has anyone , please tell me, thank you a lot