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The Dividend Discount Model with Multiple Growth Rates of Any Order for Stock Evaluation (1802.08987v1)
Published 25 Feb 2018 in q-fin.PR
Abstract: In this paper we provide a general solution for the dividend discount model in order to compute the intrinsic value of a common stock that allows for multiple stage growth rates of any predetermined number of periods. A mathematical proof is provided for the suggested general solution. A numerical application is also presented. The solution introduced in this paper is expected to improve on the precision of stock valuation, which might be of fundamental importance for investors as well as financial institutions.