EPS ($) DPS ($) pay-out EPS ($) DPS ($) Ratio Year рay-out Ratio 2018 2.17 1.15 0.53 -68.45 1.00 -0.01 2017 1.99 1.03 0.52 -3.5 1.00 -0.29 2016 1.76 0.91 0.52 -18.5 2.00 -0.11 2015 1.61 0.82 0.51 4.94 2.00 0.40 2014 1.55 0.77 0.50 5.03 2.00 0.40 2013 1.51 0.73 0.48 3.35 2.00 0.60 2012 1.41 0.66 0.47 1.77 2.00 1.13 2011 1.27 0.57 0.45 6.68 2.00 0.30 For each of the stocks, do a critical analysis and suggest whether the DDM is appropriate for valuing the stocks.
EPS ($) DPS ($) pay-out EPS ($) DPS ($) Ratio Year рay-out Ratio 2018 2.17 1.15 0.53 -68.45 1.00 -0.01 2017 1.99 1.03 0.52 -3.5 1.00 -0.29 2016 1.76 0.91 0.52 -18.5 2.00 -0.11 2015 1.61 0.82 0.51 4.94 2.00 0.40 2014 1.55 0.77 0.50 5.03 2.00 0.40 2013 1.51 0.73 0.48 3.35 2.00 0.60 2012 1.41 0.66 0.47 1.77 2.00 1.13 2011 1.27 0.57 0.45 6.68 2.00 0.30 For each of the stocks, do a critical analysis and suggest whether the DDM is appropriate for valuing the stocks.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Amy Tanner is an analyst for a US pension fund. Her supervisor has asked her to value
the stocks of General Electric (GE) and General Motors (GM) Tanner wants to evaluate
the appropriateness of the dividend discount model (DDM) for valuing GE and GM and
has compiled the following data for the two companies from 211 to 2018.
GE
GM
EPS ($)
DPS ($) pay-out EPS ($)
Ratio
DPS ($)
Year
рay-out
Ratio
2018
2.17
1.15
0.53
-68.45
1.00
-0.01
2017
1.99
1.03
0.52
-3.5
1.00
-0.29
2016
1.76
0.91
0.52
-18.5
2.00
-0.11
2015
1.61
0.82
0.51
4.94
2.00
0.40
2014
1.55
0.77
0.50
5.03
2.00
0.40
2013
1.51
0.73
0.48
3.35
2.00
0.60
2012
1.41
0.66
0.47
1.77
2.00
1.13
2011
1.27
0.57
0.45
6.68
2.00
0.30
For each of the stocks, do a critical analysis and suggest whether the DDM is appropriate
for valuing the stocks.
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