Question

What would be the value of cell B7? A B C 1 Last Dividend $0.75 2...

What would be the value of cell B7?

A B C
1 Last Dividend $0.75
2 Required Return 12%
3 Growth Rate 1 8%
4 Growth Rate 2 3%
5 Growth Rate 1 Time 5
6 Transition Period 6
7 Intrinsic Value =FAME_HModelValue(B1*(1+B3),B2,B3,B4,B5,B6)

Group of answer choices

$12.36

$18.22

$11.92

$22.44

$28.46

Homework Answers

Answer #1
Particulars 1 2 3 4 5 6
Dividend 0.81 0.8748 0.944784 1.020367 1.101996 1.135056
Discounting Factor 0.892857 0.797194 0.71178 0.635518 0.567427
Present value 0.723214 0.697385 0.672479 0.648461 0.625302

Terminal value = dividend for year 6 / ( required return - growth rate )

= 1.1351/ ( 0.12-0.03) = 12.61

intrinsic value = present value of dividends for the first 5 years + present value of terminal value

= 0.7232 + 0.6974 + 0.6725 + 0.6485 +0.6253 + 12.61/1.12^5

= 11.92

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