Question

please explain how to solve with a HP 10bIi+ calculator.

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 rannar renien Arunratever noster in Amhlily arrescihle website in whole or in nart MacBook Pro

Answer 1

There is no direct function in this calculator for stock valuation. So you have to do it in 2 steps as:

1. Calculate NPV of dividends upto year 3:

This can be done as- Clear the CF memory if used previously-> Set P/YR to 1 -> Enter year 1 to 3 dividend values using CFj key. Enter rate=9% using IRR/Yr key. Find the NPV using NPV key. Now you may store this value in a memory register (using M or K register)

2. Second step is to find the P3 & discount it to present value.

For this simply enter the formula to get P3 (i.e. 3.5693/(0.09-0.4) , & directly discount it to the present by dividing the answer by (1+0.09)^3.

Now you should get 55.123 as the value of this step. Last step is to simply recall the stored value in memory (sum of PVs of first 3 years) & add to this so you will get the 62.784 value.