Project Case Study Analysis
Valuation by dividend discount model (DDM)
The value of the shares is considered to be the amount of dividends that are distributed to the company’s current or future shareholders in the forthcomingperiod,and all dividends are discounted based on risk and time. The value of the shares is basically the net present value (NPV) of the dividend per share.(LEMKE, 2020).
Weaknesses:
- Dividends must need to beforeseeable and justifiable. If the dividend rises or the payout ratio changes drastically; the dividend discount model will not work properly.
Dividends are taxed according to the year in which they rose. Capital increases are not taxed until they are realized in the form of capital gains...............................
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