How to calculate terminal value for a dividend discount model?

I really can't figure this out. I'm trying to learn the basics of how to do a DDM. M&I says to calculate your TV based on P/E and EPS in the final year and then discount that. But it's so vague. How would you be using P/E and EPS to calculate your terminal value? I mean, what do you do with them?

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Comments (3)

Nov 7, 2015

What? If you have Price/Earning and Earnings then you can multiply them....and voila.....you have Price!

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Nov 8, 2015

But how is that helping you find your terminal dividend value? Because price and dividends are different

Nov 8, 2015

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