Robert Campbell and Carol Morris, senior vice presidents of the Mutual of Chicago Insurance Company, have a major new client that has requested that they present an investment seminar to illustrate the stock valuation process. As a result, Campbell and Morris have asked you to analyze the Bon Temps Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporarily heavy workloads. You are to answer the following questions:
**I only need the last part, part D, answered.
To find the value of the firm in this case , we need to use the multistage dividend growth model.
In the above table, the first row shows the Do, and the value of the dividend for the next 3 years based on 18% growth rate. The perpetuity value is found out using the gordon growth model which is dividend on 3rd year*(1+growth rate)/(WACC-growth rate)
putting in all the values we get the final values of dividend.
we then find the present value of each dividend by discounting them to current period. and then we sum them all tp get the value of 10.92
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