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vv-9 - value Gordon model Vo = D1(kcs – g where D1 = Do(1...

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Ch. 7 Equity Difference between debt (chapter 6) and equity (chapter 7)? Fixed income vs. residual claim. Preferred stock – hybrid security. Vps = D/kps Common stock Single holding period return Capital gains + Dividend if in $. Capital gains yield + dividend yield if in %. Projected dividend + stock price in the future discounted back to today is Vo or intrinsic
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Unformatted text preview: value. Gordon model Vo = D1/(kcs – g) where D1 = Do(1+g) Two stage growth model: Stage 1-? Individual growth rates discounted back. Last stage – Gordon model. Known as terminal value. If dividends aren’t available – as in Google box, go with FCF instead. Can solve for any of the missing variables. Citigroup case at the back of the chapter....
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