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Unformatted text preview: o Use Excel GoalSeek tool Valuing preferred shares; o Claim on perpetual stream of dividends o This cash flow represents perpetuity o Level perpetuity Valuing common stock: o Price of stock is present value of its cash flows o Growing perpetuity o Non-constant growth: 2 stage method o P/E ratio: What are people willing to pay for $1 of earning? o Price target: P/E multiple x annual EPS forecast Bond price: o PV (interest payments & face value) IRR: o A bonds yield to maturity...
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