Suppose you forecast dividends for a company through 20 dividends (5 years). You assume that from period 21 on, the dividend will grow at a constant rate, so you value the remaining dividend as a growth perpetuity using D₂₁ in the numerator to find the continuing value (a.k.a., the terminal value). How many times do you discount this continuing value by to value the stock as of today and why?

Answer rating: 100% (QA)

In finance when valuing a stock you would typically discount the future cash flows of the stock to t... View the full answer