We are trying to value a company which analysts expect to grow at a 16% rate for

Question

We are trying to value a company which analysts expect to grow at a 16% rate for the next five years. Most appropriate way of valuing this firm is to:

Use the single stage valuation formula

Use at least a two-stage growth model, with the last growth rate being a sustainable rate

Can't really value companies based upon events that have not yet occured

Use price-earnings multiples of comparable companies

Use the single stage valuation formula

Use at least a two-stage growth model, with the last growth rate being a sustainable rate

Can't really value companies based upon events that have not yet occured

Use price-earnings multiples of comparable companies

Explanation / Answer

Use at least a two-stage growth model, with the last growth rate being a sustainable rate

We know growth rate of only 5 years so it is better to use two stage growth model.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.