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3) (15 points) Please calculate an H-model value estimate for company X, with the following data: Current dividend - $1.37 In
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Answer #1


D0 = $1.37
g1 = 24%
g2 = 6%
r = 10%
H = 12 / 2 = 6

Stock Value = (D0(1+g2))/(r-g2) + (D0*H*(g1-g2))/(r-g2)

Stock value = ($1.37 * (1+0.06)) / (0.10 - 0.06) + ($1.37 * 12/2 * (0.24 - 0.06)) / (0.10 - 0.06)
= $36.305 + $36.99
= $73.295 or $73.30

H model value for company X = $73.295 Or $73.30

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