# DCF

Is the following correct: The expected dividend is used for the DCF, and this is calculated as expected return on portfolio - the risk free rate? IE Recent div £2.00 RF=4% Port expected return=13% So the Expected DIV should be £2.18 …is this correct? Thanks

Expected dividend in a constant dividend growth model is based on the growth rate. So the expected dividend must be as: Recent dividend * (1+g) = expected dividend in period n

Reineir Wrote: ------------------------------------------------------- > Is the following correct: > > The expected dividend is used for the DCF, and > this is calculated as expected return on portfolio > - the risk free rate? > > dont confuse yourself, for level 1 know these e® = RF + B(Rp-Rf) e® = div yld + g g = ROE * rr rr - 1 -dpo dpo - div per share/eps exp value = div (1-g)/r - g P/E = dpo/r-g learn these cold.

Thanks, eighty Alright, so if the dividend is given as recent we should always convert to expected by adding the 1. But would we make any adjustments to ROE/Dividend Payout/Market Return if they were given at recent instead of expected?

daj, This one "exp value = div (1-g)/r - g " did you mean exp value = div (1+g)/r - g ?

newsuper Wrote: ------------------------------------------------------- > daj, > > This one "exp value = div (1-g)/r - g " > > did you mean > > exp value = div (1+g)/r - g ? YES! sorry, i was in a rush to catch the game.