A new research study—‘International Valuation: A Proposed Method Using the Constant Perpetual Growth Model,’ by Thomas J. O’Brien (University of Connecticut—Department of Finance)—attempts to reduce valuation mistakes introduced by cross-border foreign exchange and cash-flow risks. O’Brien’s model for international valuations uses the constant perpetual expected growth model (Gordon growth model). The author argues that this ‘proposed method accounts for a currency risk premium and the economic interaction between cash flows and exchange rates.’
Please let us know if you have any comments about this article or enhancements you would like to see.