Hi,
What is the formula to find the annual return?
Any help? A bit stuck
The intrinsic value per share is $137.33 at a 6.61% annual discount rate
Based on the cash flows you have forecasted and a market price of $90.52, this company may yield a 8.37% annual return
perpetuity growth rate is 2,5%
Hi,
Given the information you have given, total return = required return + return from convergence.
If the stock price is expected to converge in one year, then there would be no adjustment in the required rate of return, assuming that RRR is annualized. if the stock price is expected to converge to its intrinsic value in 6 months or 2 years, then there would an adjustment in the required rate of return and we would then annualize the expected total return.
Some information seems missing in this question