Really need help with this, thanks. Round to 2 decimals
"A stock just paid a dividend of $2.18. The dividend is expected to grow at 20.21% for three years and then grow at 4.97% thereafter. The required return on the stock is 11.85%. What is the value of the stock?
A stock just paid a dividend of $1.82. The dividend is expected to grow at 27.55% for five years and then grow at 3.60% thereafter. The required return on the stock is 12.23%. What is the value of the stock?"
Required rate= | 11.85% | ||||||
Year | Previous year dividend | Dividend growth rate | Dividend current year | Horizon value | Total Value | Discount factor | Discounted value |
1 | 2.18 | 20.21% | 2.620578 | 2.620578 | 1.1185 | 2.3429 | |
2 | 2.620578 | 20.21% | 3.150196814 | 3.150196814 | 1.25104225 | 2.51806 | |
3 | 3.150196814 | 20.21% | 3.78685159 | 57.777 | 61.56385159 | 1.399290757 | 43.99647 |
Long term growth rate (given)= | 4.97% | Value of Stock = | Sum of discounted value = | 48.86 | |||
Where | |||||||
Current dividend =Previous year dividend*(1+growth rate)^corresponding year | |||||||
Total value = Dividend + horizon value (only for last year) | |||||||
Horizon value = Dividend Current year 3 *(1+long term growth rate)/( Required rate-long term growth rate) | |||||||
Discount factor=(1+ Required rate)^corresponding period | |||||||
Discounted value=total value/discount factor |
Please ask remaining parts seperately, questions are unrelated |
Really need help with this, thanks. Round to 2 decimals "A stock just paid a dividend...
Really need help thanks, 2 decimals A stock just paid a dividend of $1.82. The dividend is expected to grow at 27.55% for five years and then grow at 3.60% thereafter. The required return on the stock is 12.23%. What is the value of the stock?
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