Expected Div:
Year | Div | CF | Formula | Calculation |
1 | D1 | $ 1.47 | D0(1+g) | 1.4*1.05 |
2 | D2 | $ 1.54 | D1(1+g) | 1.47*1.05 |
3 | D3 | $ 1.62 | D2(1+g) | 1.54*1.05 |
Price todAY = D1 / [ Ke - g ]
= 1.47 / [ 11% - 5% ]
= 1.47 / 6%
= 24.5
Price after 3 Years = D0(1+g)^4 / [ Ke - g ]
= $ 1.4(1+0.05)^4 / [ 11% - 5% ]
= $ 1.4(1.05)^4 / [ 6% ]
= $ 1.4* 1.2155 / [ 6% ]
= 1.7017 / 6%
= 28.36
CFs in year1,2 and 3:
Year | Div | Sale Price | CF |
1 | $ 1.47 | $ 1.47 | |
2 | $ 1.54 | $ 1.54 | |
3 | $ 1.62 | $ 28.36 | $ 29.98 |
PV of CFs:
Year | Div | Sale Price | CF | PVF @11% | Disc CF |
1 | $ 1.47 | $ 1.47 | 0.9009 | $ 1.32 | |
2 | $ 1.54 | $ 1.54 | 0.8116 | $ 1.25 | |
3 | $ 1.62 | $ 28.36 | $ 29.98 | 0.7312 | $ 21.92 |
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