We are supposed to calculate theoretical price of share from a company using DDM using below steps:1. Using the past 7 years of dividends of a company, what is the best method to estimate its dividend...

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We are supposed to calculate theoretical price of share from a company using DDM using below steps:1. Using the past 7 years of dividends of a company, what is the best method to estimate its dividend growth rate (g) as a proxy (because the paid dividend growth of each year is sometimes + and -)? and why it's the best method ?
2. What factors to compare in finding several companies from very closely related sector to that company? Is it EV, EV/EBITDA, or any other ratio?
3. How to determine cost of equity using comparative earning methodology using ROE of above related companies?
4. How to estimate the next year dividend (D) ?
Thank you

Answered Same DayDec 21, 2021

Answer To: We are supposed to calculate theoretical price of share from a company using DDM using below...

Robert answered on Dec 21 2021
120 Votes
ANSWERE TO QUESTION NUMBER-1
As the paid dividend growth of each year is not stable it is better to
use Least Square method to
estimate its dividend growth rate.
It is best because it considered all paid dividend OF last years to estimate the future dividend.
ANSWERE TO QUESTION NUMBER-2
It is...
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