How Does the Single Period Capitalization Model Work

5 (1 vote)

Recorded On: 04/01/2019

The webinar will offer suggestions to business appraisers for explaining the Single-Period-Capitalization Model to their clients. The model’s basic form is as follows.

P0 = D1 / (K – g), where

P0 = current price
D1 = the next expected dividend,
K = required rate of return on equity, and
g = the constant growth rate for dividends.

However, looking at the model is not very intuitive, particularly to a business owner or attorney who is not familiar with the model. As a result, clients may view the model (and the resulting valuation) with a great degree of skepticism. This webinar will address this issue so that clients will understand, and feel more comfortable with, the appraiser’s value conclusion.

Dr. Mark Walker

PhD, CFA, CBA

University of Mississippi

M. Mark Walker, PhD, CFA, CBA is an associate professor of finance at the University of Mississippi. His research and teaching interests include corporate finance, investments, and business valuation. He has written over 30 articles in a number of academic and practitioner journals including Business Appraisal Practice, Valuation Strategies, and The Value Examiner. In addition, Dr. Walker has worked on a variety of consulting assignments including business valuations, as well as the estimation of economic and commercial damages. He previously served as the Chair of the IBA Board of Governors, and as a member of the Board of Trustees for the Financial Executives Research Foundation (FERF).