Explain how we can use the Gordon Growth Models to Value the Fair Price of a Stock
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Question:
Explain how we can use the Gordon Growth Models to Value the Fair Price of a Stock (Explain both the Constant Growth and the non-Constant Growth Models):
a) How is the DCF-Discounted Cash Flow method used in these models?
b) How we decide which is the Discount Rate for each model?
c) When do we use Present Values of Amounts and when do we use Present Values of Annuities / Perpetuities?
d) How can we make investment decisions using these models? What is the decision Rule?
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
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