Houjichasan

to topher

look at question 8(c) and its answer in the EOC problems....

CP

random_walker47

I think bpdulog is referring to the calculations for the gross and net irr for the PE valuation set.

CP

Sportsman

Thanks CP.

hassan

The 2010 Schweser QuickSheet also shows E1/r

jacksparrow

yeah interesting I think that the important factor is if E1 equals E0 under no growth assumption. here in the question I assume that we are pricing the stock at the same time we are deciding the dividends D0. if the D0 (lower than E0) were already decided then we couldnt assume E1=E0 because of the retention that already happened in the past. in that case we would have to estimate E1 = E0 x (1+ b x ROE) and assume future no growth with stable E = E1

also P/E1 = 1/r + ff x gf means ff x gf = PVGO /E1