Finally, although the DDM is typically used in a way that yields the value of a company’s share, the WACC model is typically used in a way that yields the value of the company’s equity. Therefore, to estimate the intrinsic value of an individual share, we need to divide our estimate of the intrinsic value of equity by the number of shares outstanding. Piece of cake!
- 14 Stocks II: The WACC model
- from The Financial Times Guide to Understanding Finance, 2nd Edition
- Publisher: Pearson Business
- Released: May 2011
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