Stock Valuation. FIL 341 Prepared by Keldon Bauer. Introduction. The valuation of all financial securities is based on the expected PV of future cash flows. Equity Valuation.
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Prepared by Keldon Bauer
Where: P0 = Price of stock today.
D0= Most recent dividend (or cash flow).
g1 = Growth rate over the first growth period.
k = Required rate of return for common equity.
T = Length of time the first growth rate is expected to last.
g2 = Growth rate over the second growth period.
$24.44 = Present Value