Homework Answers
Price of stock = PV of CFs from it.
DIv Calculation:
| Year | Particulars | CF | Formula | Calculation |
| 1 | D1 | $ 14.04 | D0(1+g) | 13*1.08 |
| 2 | D2 | $ 15.16 | D1(1+g) | 14.04*1.08 |
| 3 | D3 | $ 16.38 | D2(1+g) | 15.16*1.08 |
| 4 | D4 | $ 17.69 | D3(1+g) | 16.38*1.08 |
| 5 | D5 | $ 19.10 | D4(1+g) | 17.69*1.08 |
| 6 | D6 | $ 20.63 | D5(1+g) | 19.10*1.08 |
P6 = D7 / Ke
= $ 20.63 / 5%
= $ 412.59
P0:
| Year | Particulars | CF | PVF @5% | Disc CF |
| 1 | D1 | $ 14.04 | 0.952381 | $ 13.37 |
| 2 | D2 | $ 15.16 | 0.907029 | $ 13.75 |
| 3 | D3 | $ 16.38 | 0.863838 | $ 14.15 |
| 4 | D4 | $ 17.69 | 0.822702 | $ 14.55 |
| 5 | D5 | $ 19.10 | 0.783526 | $ 14.97 |
| 6 | D6 | $ 20.63 | 0.746215 | $ 15.39 |
| 6 | P6 | $ 412.59 | 0.746215 | $ 307.88 |
| Price of Stock Today | $ 394.06 | |||
Pls comment, if any further assistance is required.
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