| shareValUsingTwoStageHmodel {stockAnalyst} | R Documentation |
Calculates value of share using two stage H-Model that considers half of the length of the super-normal growth period.
Description
The basic two-stage model assumes a constant, extraordinary rate for the super-normal growth period that is followed by a constant, normal growth rate thereafter. The difference in growth rates may be substantial. For instance, the growth rate for the company Carl Zeiss Meditec was 9 percent annually for 10 years, followed by a drop to 5 percent growth in Year 11 and thereafter. In some cases, a smoother transition to the mature phase growth rate would be more realistic (Jerald E. Pinto, 2020).
Usage
shareValUsingTwoStageHmodel(divNot, r, n, H, gS, gL)
Arguments
divNot |
A number. |
r |
A number. |
n |
A number. |
H |
A number. |
gS |
A number. |
gL |
A number. |
Details
According to information provided by Jerald E. Pinto (2020), the method shareValUsingTwoStageHmodel is developed to compute value of share using two stage H-Model for the values passed to its six arguments. Here, divNot is dollar value of the current dividend, r is required rate of return on equity, n is number of years of super-normal growth period, H is which is one-half of n (that is half of the length of the super-normal growth period), gS is initial short-term dividend growth rate, and gL is normal long-term dividend growth rate after Year 2H (that is n).
Value
Input values to six arguments divNot , r, n, H, gS and gL.
Author(s)
MaheshP Kumar, maheshparamjitkumar@gmail.com
References
Pinto, J. E. (2020). Equity Asset Valuation (4th ed.). Wiley Professional Development (P&T). https://bookshelf.vitalsource.com/books/9781119628194
Examples
shareValUsingTwoStageHmodel(divNot=0.14, r=0.097,n=10,H=10/2,gS=0.15,gL=0.08)
shareValUsingTwoStageHmodel(divNot=1.37, r=0.10,n=12,H=12/2,gS=0.24,gL=0.06)
shareValUsingTwoStageHmodel(divNot=0.40, r=0.071,n=10,H=10/2,gS=0.09,gL=0.05)