Dividend basis valuation, Finance Basics

Dividend Basis Valuation

Ownership of shares in entities - The owner to obtain a cash flow consisting of future dividends and the value of a share must correspond to the recent value of this future cash flow.  The shareholder cannot expect cash flows in perpetuity as he will sell his shares at once.

          Po =   Do/Ke

Note:   Whereas there is growth in equity,  P0 = d0 (1+g)/ (ke-

 

Posted Date: 1/31/2013 1:58:53 AM | Location : United States







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