Deployment Specialists pays a current (annual) dividend of $1 and is expected to
ID: 2761049 • Letter: D
Question
Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 24% for two years and then at 5% thereafter. If the required return for Deployment Specialists is 9.5%, what is the intrinsic value of Deployment Specialists stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Deployment Specialists pays a current (annual) dividend of $1 and is expected to grow at 24% for two years and then at 5% thereafter. If the required return for Deployment Specialists is 9.5%, what is the intrinsic value of Deployment Specialists stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Explanation / Answer
where
required return = 9.5% Year Previous year dividend Dividend growth rate Dividend current year Terminal value Total Value Discount factor Discounted value 1 1 24.0% 1.24 1.24 1.095 1.132420091 2 1.24 24.0% 1.5376 35.87733 37.41493333 1.199025 31.20446474 Long term growth rate= 5.00% Value of stock = Sum of discounted value 32.34Related Questions
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