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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
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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