1. Estimate future annual dividends, cash flows to shareholders in the next five years using the estimated...
Question:
1. Estimate future annual dividends, cash flows to shareholders in the next five years using the estimated firm’s five-year growth rate, or industry five-year growth, or the combination. After five years, assume firm growths at economy wide steady state growth rate (e.g., S&P 500 five-year growth rate) forever.
2. Estimate the beta of the firm and market risk premium (You may use the beta in Yahoo Finance and use the mean of annual market excess return (Rm-Rf) and risk free rate (Rf) in French’s webpage to proxy market risk premium). Then estimate expected return using CAPM.
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
Question Posted: