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The constant growth dividend discount model can be used both for the valuation

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Question

The constant growth dividend discount model can be used both for the valuation of companies and for the estimation of the long-term total return of a stock.;Assume $20 = price of a stock today;8%=expected growth rate of dividends;$.60=annual dividend one year forward;a. Using only the preceding data, compute the expected long term total return on the stock using the constant growth dividend discount model.;b. Briefly discuss three disadvantages of the constant growth dividend discount model in its application to investment analysis.;c. Identify three alternative methods to the dividend discount model for the valuation of companies.;Additional Requirements;Level of Detail: Show all work;Other Requirements: Please show all detail including formulas to the solutions.

 

Paper#29726 | Written in 18-Jul-2015

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