Group of answer choices Such a stock should have a value of zero until it actually begins paying dividends. Under these conditions, we can estimate a value for the stock, but we cannot use any form of the constant growth DCF model to do so. The value of the stock can be found using DCF procedures by finding the present value of expected future dividends accounting for their timing and amount. Since it is expected to someday pay dividends, the value of the stock today can be found with this equation: P0 = D1/(r - g)

Group of answer choices Such a stock should have a value of zero until it actually begins paying dividends. Under these conditions, we can estimate a value for the stock, but we cannot use any form of the constant growth DCF model to do so. The value of the stock can be found using DCF procedures by finding the present value of expected future dividends accounting for their timing and amount. Since it is expected to someday pay dividends, the value of the stock today can be found with this equation: P0 = D1/(r - g)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 12QTD

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