Common Stock Valuation Models

Common Stock Valuation Models

Common Stock Valuation Models Please enter the information highlighted in yellow.

Company Name Here

Symbol

Expected Return for Common Stock LAST DIVIDEND PRICE OF STOCK EXPECTED GROWTH RATE

$3.00 Dollar Amount $100.00 Dollar Amount 9.00% Decimal

EXPECTED RETURN:

12.0%

Expected Return 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00% 16.00% 17.00% 18.00% 19.00% 20.00% 21.00% 22.00% 23.00%

EXPECTED RETURNS AT DIFFERENT GROWTH RATES 25.00%

20.00%

EXPECTED RETURN

Expected Growth Rate 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%

15.00%

10.00%

5.00%

0.00% 0%

5%

10%

15%

20%

25%

GROWTH RATE

Price of Stock - Zero Growth Model LAST DIVIDEND EXPECTED RETURN (ROR)

$3.00 Dollar Amount 6.00% Decimal

OUTPUT PRICE OF STOCK:

$50.00

Price of Stock - Constant Growth Model LAST DIVIDEND EXPECTED RETURN (ROR (k) GROWTH RATE (g)

$1.17 Dollar Amount 11.00% Decimal 3.00% Decimal k must > g

PRICE OF STOCK:

$15.06

STOCK PRICE AT DIFFERENT RORs $70.00

$60.00

$50.00

STOCK PRICE

Expected Return Price of Stock 5% $60.26 6% $40.17 7% $30.13 8% $24.10 9% $20.09 10% $17.22 11% $15.06 12% $13.39 13% $12.05 14% $10.96 15% $10.04 16% $9.27 17% $8.61 18% $8.03 19% $7.53 20% $7.09 21% $6.70

$40.00

$30.00

$20.00

$10.00

$5%

7%

9%

11%

13%

15%

17%

19%

21%

REQUIRED RATE OF RETURN

Price of Stock - Variable Growth Model 1996 $1.17

1998

1999

30.00% 14.00% Decimal

30.00%

30.00%

8.10%

$1.52

$1.98

$2.57

$2.78 $50.91

$1.52

$1.98

$2.57

$53.69

DIVIDENDS PRICE CASH FLOWS PRICE OF STOCK (Present Value): Price of Stock Expected (Present Return Value) 5% $49.63 6% $47.88 7% $46.21 8% $44.61 9% $43.08 10% $41.62 11% $40.22 12% $38.88 13% $37.61 14% $36.38 15% $35.21 16% $34.08 17% $33.00 18% $31.97 19% $30.97 20% $30.02 21% $29.11

1997

2000

2001 8.10% Decimal

$3.00

$36.38 STOCK PRICE AT DIFFERENT RORs $60.00

$50.00

$40.00

PRICE OF STOCK

LAST YEAR (e.g., 1996) LAST DIVIDEND GROWTH RATE (g) EXPECTED RETURN (ROR) (k)

$30.00

$20.00

$10.00

$0.00 6%

8%

10%

12%

14%

16%

REQUIRED RATE OF RETURN

18%

20%

22%