R/45_terminalValueUsingPE.R

In stockAnalyst: Equity Valuation using Methods of Fundamental Analysis

#'Calculates  Terminal Value (TV) of the stock using PEs.
#'@description
#'Terminal Value at time \code{n} is calculated by taking benchmark value of trailing PE that is multiplied by EPS of the stock at time \code{n} where the final growth stage begins . This also means that Terminal Value of the stock is obtained by using comparable benchmark PE without considering growth or using multistage GGM and thereby incorporating the impact of growth (Jerald E. Pinto, 2020).
#'@details
#'According to information obtained from Jerald E. Pinto (2020), the method \code{terminalValueUsingPE} is developed for computing Terminal Value (TV) of the stock using PEs  for the values passed to its six arguments. Here, \code{avg} is character string, either comparable or GGM , \code{benchmarkPE} is benchmark PE Multiple,\code{En} is EPS of the stock at time \code{n} where the final growth stage begins, \code{payout} is payout ratio, \code{g} is sustainable growth rate from GGM, and \code{r} is required rate of return on the equity.
#'@param  avg  character vector.
#'@param  benchmarkPE number.
#'@param  En number.
#'@param  payout number.
#'@param  g number.
#'@param  r number.
#'@return Input values to six arguments  \code{avg}, \code{benchmarkPE},\code{En},\code{payout},\code{g}, and \code{r}.
#'@author MaheshP Kumar, \email{maheshparamjitkumar@@gmail.com}
#'@examples
#'terminalValueUsingPE("comparable",benchmarkPE=14.3,En=3,payout=0.45,g=0.0715,r=0.10)
#'terminalValueUsingPE("GGM", benchmarkPE=14.3,En=3,payout=0.45,g=0.0715,r=0.10)
#'@export
terminalValueUsingPE<-function (avg=c("comparable","GGM"), benchmarkPE,En,payout,g,r){
  if (avg != "GGM" )
  { TV <- benchmarkPE*En
    (TV = round(TV, digits=2))}
  else
  { TV= (En*payout * (1+g) ) / (r-g)
    (TV = round(TV, digits=2))}
}