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(7-2) Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of...

(7-2) Boehm Incorporated is expected to pay a $1.50 per share dividend at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs , is 13%. What is the estimated value per share of Boehm’s stock? Please complete Problems P7-2 Modified (in addition, assuming a stock price of $22, calculate the stock's expected rate of return). (must be completed using Excel show your work).

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Answer #1

We can calculate the desired result in excel sheet as follows:

Formulas used in the excel sheet are:

So, the Price of the stock comes out to be $ 21.43 and the expected return if the price is $ 22 is 12.82%

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