Question

Please do not use D/(1-R)^x formula to solve.

How do solve this probelm using the cashflow function on BA 2 plus texas instrument business analyst calculator?

what do I type in the calculator for CF0, CO1, FO1, etc?

SUL . LO 1 7 Stock Valuation Burkhardt Corp. pays a constant $15.25 dividend on its stock. The company will maintain this dividend for the next nine years and will then cease paying dividends forever. If the required return on this stock is 9.2 percent, what is the current share price?

Answer 1

To find the share price, we need to put the following values in the financial calculator:

CF0 = 0; C01 = 15.25; F01 = 9; Press NPV, then put I = 9.2; then press the down arrow key and then press CPT, which gives us 90.69

So, Current share price = $90.69