Use the following three methods to determine if you will purchase this stock at current market price.
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Question:
- Use the following three methods to determine if you will purchase this stock at current market price.
- Assume market interest rate (r) as 12%, constant dividend growth rate (g) as 10%, and industry average P/E ratio as 25 times
(1) True value method (Gordon dividend valuation model)
(2) Annual rate of return method (Gordon dividend valuation model)
(3) P/E multiples approach
3. If you purchased this stock at 52-week range low, sold it at current market price, and you also received dividend during this holding period; calculate holding period rate of return
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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