Question

1.
Fuji Co. is growing quickly. Dividends are expected to grow at a rate of 22 percent for the next three years, with the growth rate falling off to a constant 6 percent thereafter. If the required return is 12 percent and the company just paid a dividend of $3.25, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price
2.3.4.

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A B C D E 2 | 2 Porfolio's Stock Stock O Stock P Stock Q Value $17,700.00 $25,500.00 $40,300.00 $83,500.00 Weight 21.20% 30.54% 48.26% Return 15.40% 12.10% 11.10% moooooo Expected Return of Q 8.58% 1121 12 13 3. New Portfolio Current Portfolio New investment Value $165,000.00 $70,000.00 $235,000.00 Weight 70.21% 29.79% Beta 1.35 1.115 New Portfolio Beta 1.28 New Investment Beta 1.115

Cell reference -

A B c DE 2 1 2 2 Porfolio's Stock Value Return Stock O Stock P Stock Q Weight =C3/$C$6 =C4/$C$6 =C5/$C$6 17700 25500 =C6-C3-C4 83500 0.154 0.121 =11.1% Expected Return of Q =(E6-((D3*E3)+(D4*E4))/D5 11 3 Value Beta 12 New Portfolio Current Portfolio New investment Weight =C12/$C$14 =C13/$C$14 165000 70000 =SUM(C12:C13) 1.35 =C18 New Portfolio Beta 1.28 New Investment Beta =(C16-(D12*E12))/D13

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.