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?

Comments (3)

Nov 7, 2015

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

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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