sir in the model answer when estimating the value when not doing the large project using DVM
why isnt (1+g) which is 6% added to the formula in the answer ?
and when you look at the bottom of the page where annual growth is 7 % it is added in the formula , it says 0.3100 * 1.07 and then divided by 12% - 7% ,
but the above is simply 0.270 divide by 12 - 6 ,
dividends will grow at historic rate at 6% , so why isnt it added to the formula ?
what the difference between the two sentences ?
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march 2016 lirio co
8y ago#1But 6% is added!!!
If you look at the line above, then 0.270 is 0.255 x 1.06 !!
Do(1+g) is the dividend in 1 years time (the dividend 'now, Do, together with one years growth).
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