Question: Suppose Jane has estimated Company A s equity value using the discounted abnormal earnings valuation model and the estimate was $ 2 3 per share.

Suppose Jane has estimated Company As equity value using the discounted abnormal earnings valuation model and the estimate was $23 per share. However, when Jane checked Company As actual stock price, it was $29 per share.
How many of the following could be a potential reason(s) for the difference between Janes stock price estimate and the actual price?
Company As investors are more optimistic about the companys future abnormal earnings than Jane
Janes cost of equity estimate is higher than the cost of equity assumed by Company As investors
Janes forecasts for expected net income were more pessimistic than the investors expectation for future net income
While Jane assumes that Company As net income grows at a rate of 5% after year n, Company As investors anticipate it to grow at a higher rate

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