1 Two-Stage Dividend Growth Model and H-Model 2 Please use following information and solve the Two-Stage Dividend Discount Model and H-Model Problem 3 Suppose a firm has a current dividend of D(0) = $2.00 which is expected to growth 25% a year for 3 years 4 and thereafter grow at the rate of 5 percent with a discount rate or required rate of return of 15 percent 6 D(0) $2.00 3 7 N 8 G1 9 G2 10 K 25% 5% 15% DK N G1 G2 K 11 12 1 Two-Stage Dividend Discount Model 13 What is the value of the stock? Po 14 P(O) $ 34.07 $34.07 $87.57 Do (1+g₁ k-9₁ 15 16 17 2 H-Model 18 What is the value of the stock? 19 20 Year 1 21 Growth Rate 25.00% Year 2 Year 3 17.50% 9.17% Year 4 0.83% 22 Dividends 23 241 Please do not type any Numbers in the table above You must link the table in Cell A6 to this Table 25 26 First Calculate P(3) $ 34.69 $ 102.88 27 28 PV of D(1) $ 2.17 $ 5.42 29 PV of D(2) $ 2.24 $ 5.57 30 PV of D(3) $ 2.17 $ 5.41 31 PV of P(3) $ 22.81 $ 59.54 32 33 P(0)= $ 29.39 $75.93 34 Show Transcribed Text Need help with formulas, specifically on H model. Correct answers are off to the right side in black (ignore the red). All relevant information is showing. Will thumbs up if answered. Thanks :)
1 Two-Stage Dividend Growth Model and H-Model 2 Please use following information and solve the Two-Stage Dividend Discount Model and H-Model Problem 3 Suppose a firm has a current dividend of D(0) = $2.00 which is expected to growth 25% a year for 3 years 4 and thereafter grow at the rate of 5 percent with a discount rate or required rate of return of 15 percent 6 D(0) $2.00 3 7 N 8 G1 9 G2 10 K 25% 5% 15% DK N G1 G2 K 11 12 1 Two-Stage Dividend Discount Model 13 What is the value of the stock? Po 14 P(O) $ 34.07 $34.07 $87.57 Do (1+g₁ k-9₁ 15 16 17 2 H-Model 18 What is the value of the stock? 19 20 Year 1 21 Growth Rate 25.00% Year 2 Year 3 17.50% 9.17% Year 4 0.83% 22 Dividends 23 241 Please do not type any Numbers in the table above You must link the table in Cell A6 to this Table 25 26 First Calculate P(3) $ 34.69 $ 102.88 27 28 PV of D(1) $ 2.17 $ 5.42 29 PV of D(2) $ 2.24 $ 5.57 30 PV of D(3) $ 2.17 $ 5.41 31 PV of P(3) $ 22.81 $ 59.54 32 33 P(0)= $ 29.39 $75.93 34 Show Transcribed Text Need help with formulas, specifically on H model. Correct answers are off to the right side in black (ignore the red). All relevant information is showing. Will thumbs up if answered. Thanks :)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:1 Two-Stage Dividend Growth Model and H-Model
2 Please use following information and solve the Two-Stage Dividend Discount Model and H-Model Problem
3 Suppose a firm has a current dividend of D(0) = $2.00 which is expected to growth 25% a year for 3 years
4 and thereafter grow at the rate of 5 percent with a discount rate or required rate of return of 15 percent
6 D(0)
$2.00
3
7
N
8
G1
9
G2
10 K
25%
5%
15%
DK
N
G1
G2
K
11
12
1 Two-Stage Dividend Discount Model
13
What is the value of the stock?
Po
14
P(O)
$ 34.07 $34.07 $87.57
Do (1+g₁
k-9₁
15
16
17
2 H-Model
18
What is the value of the stock?
19
20
Year 1
21
Growth Rate
25.00%
Year 2 Year 3
17.50% 9.17%
Year 4
0.83%
22
Dividends
23
241
Please do not type any Numbers in the table above
You must link the table in Cell A6 to this Table
25
26
First Calculate P(3)
$ 34.69
$ 102.88
27
28
PV of D(1)
$
2.17
$
5.42
29
PV of D(2)
$
2.24
$ 5.57
30
PV of D(3)
$
2.17
$ 5.41
31
PV of P(3)
$ 22.81
$ 59.54
32
33
P(0)=
$ 29.39
$75.93
34
Show Transcribed Text
Need help with formulas, specifically on H model. Correct answers are off to the right side in black (ignore the red). All
relevant information is showing. Will thumbs up if answered. Thanks :)
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