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a) Analysts attempt to value ordinary shares, in order to determine if market values are correct. Identify and describe...

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a) Analysts attempt to value ordinary shares, in order to determine if market values are correct. Identify and describe the more common methods of valuation. Include a detailed explanation of the dividend discount method of valuation. [10 marks] b) A similar type of approach can be employed when estimating value of a project or of an entire business. Describe this method, and identify the measures or inputs that are required when determining value. [10 marks] c) Othercell Motor Company just paid a dividend of €1.40. Analysts expect its dividend to grow at a rate of ten percent next year, eight percent for the following two years, and then a constant rate of five percent thereafter. Estimate the current value of Othercell shares. [10 marks]

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Business Statistics

Business Statistics

ISBN: 978-0321925831

3rd edition

Authors: Norean Sharpe, Richard Veaux, Paul Velleman

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Posted Date: October 07, 2022 06:11:30
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This video discusses the fundamental idea and workings of the dividend discount approach to computing the present value of a share. The video explains why and how to compute share present values as well as how dividend growth may impact market value calculations.

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