Homework Answers
Current Price =PV of CFs from it.
P4 = D4(1+g) / [ Ke - g ]
= 2.60(1.06) / [ 12% - 6% ]
= 2.1836 / 6%
= 36.39
Price Today:
| Year | CF | PVF @12% | Disc CF |
| 1 | $ 18.00 | 0.8929 | $ 16.07 |
| 2 | $ 10.00 | 0.7972 | $ 7.97 |
| 3 | $ 8.00 | 0.7118 | $ 5.69 |
| 4 | $ 2.60 | 0.6355 | $ 1.65 |
| 4 | $ 36.39 | 0.6355 | $ 23.13 |
| Price Today | $ 54.52 | ||
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