You are considering buying the stock of two very similar companies. Both companies are expected to earn $3 per share this year. However, Company D is expected to pay all of its earnings out as dividends, while Company G is expected to pay out only one-third of its earnings, or $1. D's stock price is $20. . Both companies are equally risky. What is the best estimate of Company G's growth rate?© BrainMass Inc. brainmass.com October 24, 2018, 8:11 pm ad1c9bdddf
The total expected return for D is Kd = D/Po + g = 15% + 0% = 15%. The total expected return for G will ...
Comparison of stocks from similar companies but with different earnings payouts.
Stock Valuation Methods
Discuss the various stock valuation methods and the relevant factors that affect the valuation process.
Which factor(s) have the most bearing on stock price?View Full Posting Details