How can such a large discrepancy in the two dollar values


Using the constant growth rate model (and data from Bloomberg) shows that the present value of expected dividends for the next five years for McDonald's is only about $1.98. Thus, over a forward-looking five-year horizon the value of the stock is $1.98. Yet on this same date McDonald's stock is selling among investors in the secondary market for $24.83 per share. How can such a large discrepancy in the two dollar values on the same date be explained?

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Finance Basics: How can such a large discrepancy in the two dollar values
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