Company name is CDA codan limited.. we just need 10 slides of share valuation on dat company. No figures please. And no information about the company

1 answer below »
Company name is CDA codan limited.. we just need 10 slides of share valuation on dat company. No figures please. And no information about the company
Answered Same DayNov 07, 2021

Answer To: Company name is CDA codan limited.. we just need 10 slides of share valuation on dat company. No...

Shakeel answered on Nov 10 2021
146 Votes
Slide 1
Stock valuation of
CDA Codan ltd.
Presented by
……………………………..
Valuation Approaches
Discounted Cash Flow (D
CF) Approach
Price Earnings (P/E) Approach
DCF Approach
Under DCF Approach, all the expected cash flows associated with the stock is discounted by an appropriate discount rate (cost of equity) to find the intrinsic value of share.
The expected cash flows associated with the stocks are generally in the form of dividends.
Gordon’s Dividend growth rate model is used under DCF approach.
According to the characteristics of dividend growth rate, Gordon’s Constant growth rate model or 2 stage growth rate model is used.
Gordon’s Constant growth rate model
Under this model, it is assumed that dividend grows at fixed growth rate in perpetuity.
Mathematically, it is represented as –
D1 : it is next year’s expected dividend per share
Ke: discount rate or Cost of equity estimated using the CAPM
g: expected dividend growth rate (assumed to be constant)
Calculation of variables
Cost of Equity using CAPM –
Beta of stock, β = 0.67
Risk free rate of return, Rf = 2.68%
Market return, Rm = 10.40%
Hence, According to CAPM,
Cost of Equity, Ke = Rf + β*(Rm – Rf)
...
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here