Question

Do a basic valuation of Facebook.

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Constant growth discount models
Constant dividend growth model P_o=D_1/(k-g)
Residual Income Model: P_o=(〖EPS〗_1-B_o xg)/(k-g)

Relative Valuation
Trailing P/E ratio
Forward P/E ratio
S/P ratio
P/B ratio (optional)
Cost of equity (ks)
Beta=0.74 (yahoo)
Rf=3 % (30-year Tbond)
Rm-Rf=5% (Damodaran webpage)
Ks = Kf +beta*(km-kf) = 3% + 0.74 * 5% = 6.70%...

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