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QUESTION

# How do I estimate the value per ordinary share of JB Hi-Fi as of 30/09/2018 based on data from 2017 and before using the Dividend Discount Model?

How do I estimate the value per ordinary share of JB Hi-Fi as of 30/09/2018 based on data from 2017 and before using the Dividend Discount Model?

For the dividend discount model: p = D1(Ri - g)

Where:

P= Price

D1= Next year's annual dividend per share

g= Constant growth rate of dividends

Ri = Cost of Equity

So I have already calculated Cost of equity as 6.93% based on a beta of 0.405003246 (calculated based on historical data on Yahoo finance of JBH from 2013 - 2017), a market risk premium of 0.06 and a risk-free rate of 0.045 (market risk premium and risk-free rate taken from KPMG survey).

However, whenever I try to calculate g or constant growth rate, I always get a number bigger than the Cost of equity, which means I'll get a negative answer for p when I try to compute it. Where did I go wrong?

Calculations all based off historical data at Yahoo Finance or the JB Hi-Fi Annual Reports.