D FNB 100 Final G federal funds rate. Goo x STUDENTS xR CUNY Login C O ezto.mhed

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D FNB 100 Final G federal funds rate. Goo x STUDENTS xR CUNY Login C O ezto.mheducation.com/hm.tpx connect. FINANCE 00 Final Question 18 (of 25) value 4.00 points Problem 8-27 Value of Future Cash Flows (LG5) A firm recently paid a so.45 annual dividend. The dividend is expected to increase by 10 percent in each of the next four years. In the fourth year, the stock price is expected to be $80 If the required return for this stock is 13.5 percent what is its current value? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Current value References eBook & Resources Worksheet Problem 8-27 Value of Future Cash Flows (LG5) Diticulity: 2 Advanced

Explanation / Answer

Current Value = $49.87

Current Value: Year Cash Flow PVF(13.5%) PV of CF 1 0.45*110% 0.495 0.881057269 0.4361233 2 0.495*110% 0.5445 0.776261911 0.4226746 3 0.5445*110% 0.59895 0.683931199 0.4096406 4 0.59895*110% 0.658845 0.602582554 0.3970085 4 80 0.602582554 48.206604 49.872051

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