Cash based valuation methods

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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May 22, 2018 at 8:12 am #453299
claudia1
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Hello Sir, can you assist? I am trying to understand why in example 1 on page 76 in the notes in working out the perpetuity, 12.168 was divided by .1 – .04.
May 22, 2018 at 9:55 am #453327
John Moffat
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It is an inflating perpetuity and so we use the dividend valuation formula.
The dividend valuation formula will give the present value of any inflating perpetuity (not just the market value of shares when we are using the inflating dividend flows).
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