Dividend Discount Model in Financial Analysis

Introduction to the Dividend Discount Model The Dividend Discount Model (DDM) is used to estimate the price of a company’s stocks. The model is based on the theory that the present value of the stock is equal to the present value of all future dividend payments when discounted back to the present. If the present […]

Perpetuity Concept in Financial Analysis

Introduction The Perpetuity concept refers to the present value (PV) of equal periodic cash flows that investors will receive over an indefinite future period. We need to calculate the present value of perpetual cash flows for a variety of reasons, some being: Companies have cash flow projections for a reasonable number of periods and no […]