Hi,
1. Growth of 10% is used when calculating FCF and DVM - growth rate has not been stable in previous years. I understand the 10% may come from growth in revenue but how can this apply to growth in divs and future cashflows?
2. If we do not have a stable growth rate, how do we find growth for use in formula?
Based on 3 years of future dividends in solution - i calculate growth of 6%:
(PV Most recent dividend (y3) PV dividend in y1) ^ (1/3)
Does this suffice?
Thanks
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Stanzial Co
2y ago#1Note (vii) in the question says that dividends will grow at the same rate as the turnover.
Otherwise what you have written would have been OK.
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