Homework Answers
Answer:
D0 = $2.00
D1 = $2.00 * (1 + 0.30) = $2.600
D2 = $2.600 * (1 + 0.20) = $3.120
D3 = $3.120 * (1 + 0.10) = $3.432
D4 = $3.432 * (1 + 0.04) = $3.5693
Required Return, rs = 9.00%
Growth Rate, g = 4.00%
P3 = D4 / (rs - g)
P3 = $3.5693 / (0.09 - 0.04)
P3 = $3.5693 / 0.05
P3 = $71.39
Present Value of Stock Price at Year 3 = P3 / (1 + rs)^3
Present Value of Stock Price at Year 3 = $71.39 / 1.09^3
Present Value of Stock Price at Year 3 = $55.123
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Box Style + Valuing Common Stock with Nonconsta Do = $2.00. 0 rs = 9% 1 g = 30% g = 20% g = 10% 3.120 2.600 3.432 3.5693 2.385 2.626 2.650 55.123 62.784 = P. 3.5693 _$71.39 0.09 -0.04 cated, or posted to a publicly accessible website, in whole or in part. Notes Comments :: - + 121% E 2020 CARGADA I Ramning. All Rihts Reserved. MAV not ha...
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