Question: The only value a stock really has is its ability to generate cash for the shareholder. We have to do is figure out how much




The only value a stock really has is its ability to generate cash for the shareholder. We have to do is figure out how much all those dividend payments are going to be and discount them back to their present value. All those dividend payments happen in the future. We have to make a few assumptions. First, there're [Select ] of dividend payments. Second, we look at the company's history to come up with a growth rate of the [Select] are expected to change each year. Finally, we need to know how much we're going to [Select ] y they the value of those future payments so we can figure out their present value. to their present value. All those dividend payments happen in the future. We have to make a few assumptions. First, there're [Select] of dividend payments. wth rate of the [ Select] Second, we look at the company four infinite number [Select] ar. Finally, we need to know seven Second, we look at the company's history to come up with a growth rate of the [Select ] are expected to change each year. Finally, we need to know Select] dividends capital ct] the value of those future payments the value of those future payments how much we're going to [Select ] [ Select] so we can figure out their compound reduce
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
