1. A company produces goods or offers services to earn profits. The cash flow earned from...

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1. A company produces goods or offers services to earn profits. The cash flow earned from such business activities determines its profits, which gets reflected in the company's stock prices. Companies also make dividend payments to stockholders, which usually originates from business profits. The DDM model is a quantitative method used for predicting the price of a company's stock based on the theory that the value of a company is the present worth of the sum of all of its future dividend payments. Being a financial analyst, you are required to answer following questions: i. What is dividend valuation model and why is it an important concept in finance? ii. Predict the price of a stock of any company (of your own choice) based on the theory of DDM that its present-day price is worth the sum of all of its future dividend payments when discounted back to their present value (for 5 years). iii. The value obtained from the DDM is higher/lower than the current trading price of shares, then explain either stock is under-Priced/value or overpriced/valued. 1. A company produces goods or offers services to earn profits. The cash flow earned from such business activities determines its profits, which gets reflected in the company's stock prices. Companies also make dividend payments to stockholders, which usually originates from business profits. The DDM model is a quantitative method used for predicting the price of a company's stock based on the theory that the value of a company is the present worth of the sum of all of its future dividend payments. Being a financial analyst, you are required to answer following questions: i. What is dividend valuation model and why is it an important concept in finance? ii. Predict the price of a stock of any company (of your own choice) based on the theory of DDM that its present-day price is worth the sum of all of its future dividend payments when discounted back to their present value (for 5 years). iii. The value obtained from the DDM is higher/lower than the current trading price of shares, then explain either stock is under-Priced/value or overpriced/valued.

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i The Dividend Valuation Model DDM is a financial model used to estimate the intrinsic value of a stock by calculating the present value of all expected future dividend payments The DDM is based on th... View the full answer