Valuation Based on Required Payback Period

  • Zhiqiang Zhang
Part of the SpringerBriefs in Business book series (BRIEFSBUSINESS)


This chapter finds a new valuation method competitive to the DCF method and further derives a series of valuation models based on the new method. These models solve the key valuation issues in absolute valuation ---- can avoid the ZZ growth paradox trouble, and are flexible enough to value individual stocks in stable sectors and in high-growth sectors. These models solve as well the key valuation issues in relative valuation ---- can find the theoretical valuation ratios (P/E, P/B and P/S) effectively, and measure the bubbles of the individual stocks and the overall market. This chapter finally indicates the vast potentials of this brand new valuation method by demonstrating some basic applications.


Cash Flow Stock Price Option Price Future Cash Flow Option Price Model 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. 1.
    Gordon MJ (1962) The savings investment and valuation of a corporation. Rev Econ Stat 44(1):37–51CrossRefGoogle Scholar
  2. 2.
    Damodaran A (2006) Damodaran on valuation: security analysis for investment and corporate finance. John Wiley & Sons, IncGoogle Scholar
  3. 3.
    Black F, Scholes M (1973) The pricing of options and corporate liabilities. J Polit Econ 81(3):637–654CrossRefGoogle Scholar
  4. 4.
    Merton R (1973) Theory of rational option pricing. Bell J Econ Manage Sci 4(1):141–183Google Scholar
  5. 5.
    Cox JC, Ross SA, Rubinstein M (1979) Option pricing: a simplified approach. J Financ Econ 7:229–263CrossRefGoogle Scholar
  6. 6.
    Hull JC (2012) Options, Futures, and Other Derivatives, 8th edn. Pearson Education Limited. Google Scholar

Copyright information

© The Author(s) 2013

Authors and Affiliations

  1. 1.Business SchoolRenmin University of ChinaBeijingPeople’s Republic of China

Personalised recommendations