Good day Tutor,
I have a question regarding the explanation on the use of DVM of Iping Co.
What does it mean by the DVM may not provide “realistic” valuation because dividends paid depends on investment opportunities. Why is it not realistic?
And Is it wrong for the company’s dividend paid policy depends on investment opportunities?
Thank you for your time Tutor
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Sept/Dec 2016 Q3(b) Chithurst Co
8y ago#1The share price depends on shareholders expectations of future dividends, which in turn depends on future investment opportunities. But nobody knows for certain what will happen in the future or what shareholders expectations are.
hi sir john
in June 2015 question 3 b they calculated the market capitalization through dividend valuation model by PV of dividends and growth.
why in this question (chithurst) they ignore this. (they do not calculate PV of dividends per annum), although cost of equity is given for all three companies.
am i missing something?
thanks alot for your quick responses on queries. you are such a big support for us.
@misbahkiran said: hi sir john in June 2015 question 3 b they calculated the market capitalization through dividend valuation model by PV of dividends and growth. why in this question (chithurst) they ignore this. (they do not calculate PV of dividends per annum), although cost of equity is given for all three companies. am i missing something? thanks alot for your quick responses on queries. you are such a big support for us.i just saw the question again and got the answer for my above query... in june its future dividends which we discounted...but in chithurst its actually historical data...
6y ago#4That is correct :-)
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