Safari File EditViewHistory Bookmarks Window Help - - ng.cengage.com in June 201

Question

Safari File EditViewHistory Bookmarks Window Help - - ng.cengage.com in June 2010, WSFS Financial C Filed For... ) Chegg.com Larry Nelson Holds 1,000 Shares of General Electri.... Chegg.com MINDTAP Ch 07: Assignment- Common Stock: Characteristics, Valuation, and Issuance c Back to Assignment Average: 78 Attempts: 8. Dividend valuation model The following graph shows the value of a stock's dividends over time. The stock's current dividend is S 1.00 per share, and dividends are expected to grow at a constant rate of 2.70% per year. The intrinsic value of a stock should equal the sum of the present value (PV) of all of the dividends that a stock is supposed to pay in the future, but many people find it difficult to imagine adding up an infinite number of dividends. Calculat to be paid 10 and 20 years from now (D10 and D20). Assume that the stock's required return (r) is 8.40%. e the present value (PV) of the dividend paid today (Do) and the discounted value of the dividends expected Note: Carry and round the calculations to four decimal places Time Period Dividend's Expected Expected D Future Value Present Value End of Year 10 End of Year 20 End of Year 50 Using the red curve (cross symbols), plot the present value of each of the expected future dividends for years 10, 20, ing curve wi ilustrate how the PV of a particular dividend payment will decrease depending on how far from today the dividend is expected to be received 0 888 ra 2 3 4 6

Explanation / Answer

Time Period Future Value Present value Now 1 10.0000 1.30528 0.582655 20.0000 1.70376 0.339487 50.0000 3.78898 0.067152

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.