Expected dividend for next 5 years | |||||||
Years | 1 | 2 | 3 | 4 | 5 | Total | |
Dividend(expected) | 1.7825 | 2.0499 | 2.3574 | 2.7110 | 3.1176 | ||
PVF @ 6% | 0.9434 | 0.8900 | 0.8396 | 0.7921 | 0.7473 | ||
PV of dividend | 1.6816 | 1.8244 | 1.9793 | 2.1473 | 2.3297 | 9.9623 | |
Value of share at the end of year 5 | = | div at yr 5 end/k-g | |||||
= | 9.9623/(0.06-0.05) | ||||||
= | 9.9623/0.01 | ||||||
= | 996.23 | ||||||
PV of value today | = | 996.23*PVF (6%,5 years) | |||||
= | 744.441 | ||||||
Value of share | = | PV of share price+PV of dividend | |||||
= | 744.441+9.9623 | ||||||
= | $754.40 |
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