Question

Input Dividend growth rate (Year 1 to 3) 30.0% Dividend growth rate (Year 4 onwards) 6.0%...

Input
Dividend growth rate (Year 1 to 3) 30.0%
Dividend growth rate (Year 4 onwards) 6.0%
Required return 11.0%
Recent Dividend ($)        5.50
Calculation & Output
Year 0 Year 1 Year 2 Year 3 Year 4
Dividends
Question 11
Terminal Value
Question 12
Current Share Price
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Answer #1
Input
Dividend growth rate (Year 1 to 3) 30.00%
Dividend growth rate (Year 4 onwards) 6.00%
Required return 11.00%
Recent Dividend ($)        5.50
Calculation & Output
Year 0 Year 1 Year 2 Year 3 Year 4
Dividends 5.50 7.15 9.30 12.08 12.81
Terminal Value = 12.81/(0.11-0.06) = 256.20
PVIF at 11% 1 0.90090 0.81162 0.73119
PV at 11% 6.44 7.54 8.84
Sum of PV of dividends, years 1 to3 22.82
PV of terminal value = 256.20*0.73119 = 187.33
Current Share Price 210.15
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