Question

Marcel Co. is growing quickly. Dividends are expected to grow at a 22 percent rate for the next 3 years, with the growth rate falling off to a constant 4 percent thereafter. Required: If the required return is 10 percent and the company just paid a $1.70 dividend. what is the current share price? (Do not round your intermediate calculations.) $46.50 $47.43 $45.57 $44.18 $42.84

Answer 1

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File Home Insert Page Layout Formulas Data Review View Add-Ins - Cut AutoSum A A Wrap Text Calibri 11 General Fill Copy A Merge & Center Conditional Format Insert Delete Format Paste S % Cell Sort & Find & 2 Clear Format Painter Formatting ble Styles er Select Clipboard Font Alignment Number Shules Cells Editing U10 AD AB V W X Y Z AA AC 1 2 PART 1 DC 1.7 D1 2.0740 1.7*(1+0.22) 2.5303 2.074*(1+0.22) 3.0869 2.5303*(1+0.22) 3.2104 3.0869*(1+0.04) 3 D2 D3 5 D4 6 7 PART 2 g-4%, ke 10% P3= D4/(ke-g)3.2104/(0.10-0.04) 53.51 9 10 11 PRICE OF STOCK TODAY PART 3 12 PV OF ALL CASH FLOW PV FACTOR @10% 1 D1 0.9091 1.89 13 2.0740 14 2 D2 2.5303 0.8264 2.09 15 56.5936 0.7513 42.52 3 D3 P3 [3.0869 53.51] CURRENT PRICE 16 46.50 17 PO= 18 19 NAME Sheeti E I 130% ©- bond covexity DGMport future INDEX INTL CAP BUD PV, FV, ANNUITYDIR right clean cap stru WACC RESI ex div DIV POLICY 14 H LEASING YIELD bond portfolio Re erences 05:14 W E m A ENG 8-06-2019 8 8 8 %