### Dividend Valuation Model for GE#### Assumptions and Inputs for GE1. **Beta (β)**: 1.12. **Market Premium (mkt_prem)**: 0.083. **Risk-Free Rate (rf)**: 0.0294. **Cost of Equity (k_equity)**: 0.11705. **Terminal Growth Rate (term_gwth)**: 0.094These inputs are used to forecast dividends, calculate term value, and determine investor cash flow (CF).#### Yearly Dividend Forecasts| Year | Dividend | Dividend Growth | Term Value | Investor CF ||------|----------|-----------------|------------|-------------|| 2019 | 3.12 | | | 3.12 || 2020 | 3.38 | | | 3.38 || 2021 | 3.64 | | | 3.64 || 2022 | 3.90 | | | 3.90 || 2023 | 4.19 | 0.0740 | | 4.19 || 2024 | 4.51 | 0.0760 | | 4.51 || 2025 | 4.86 | 0.0780 | | 4.86 || 2026 | 5.25 | 0.0800 | | 5.25 || 2027 | 5.68 | 0.0820 | | 5.68 || 2028 | 6.15 | 0.0840 | | 6.15 || 2029 | 6.68 | 0.0860 | | 6.68 || 2030 | 7.27 | 0.0880 | | 7.27 || 2031 | 7.93 | 0.0900 | | 7.93 || 2032 | 8.66 | 0.0920 | | 8.66 || 2033 | ### Intrinsic Value Calculation of Rio Tinto Using the Three-Stage Growth ModelTo calculate the intrinsic value of Rio Tinto in each of the following scenarios, we use the three-stage growth model. Each scenario is treated independently. The intrinsic value results are detailed below.#### Scenario a: Terminal Growth Rate of 10.30%- **Instruction**: Round your answer to 2 decimal places.- **Provided Answer**: $171.33 ![Error](https://via.placeholder.com/15) **Answer is complete but not entirely correct.**#### Scenario b: Actual Beta of 1.05- **Instruction**: Round your answer to 2 decimal places.- **Provided Answer**: $141.48 ![Error](https://via.placeholder.com/15) **Answer is complete but not entirely correct.**#### Scenario c: Market Risk Premium of 9.50%- **Instruction**: Round your answer to 2 decimal places.- **Provided Answer**: Not provided in the image.Each of these scenarios represents different conditions under which the intrinsic value of Rio Tinto is computed. The errors indicate that while the provided answers are almost there, there are minor inaccuracies. Accurate intrinsic values are essential for making informed investment decisions.

The intrinsic value of a share is the estimated true value of a company's stock based on its…

Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1 Treat each scenario independently. a. The terminal growth rate will be 10.30%. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Intrinsic value $ 171.33 X b. Rio Tinto's actual beta is 1.05. (Round your answer to 2 decimal places.) > Answer is complete but not entirely correct. $ 141.48 X c. The market risk premium is 9.50%. (Round your answer to 2 decimal places.)

Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1 Treat each scenario independently. a. The terminal growth rate will be 10.30%. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Intrinsic value $ 171.33 X b. Rio Tinto's actual beta is 1.05. (Round your answer to 2 decimal places.) > Answer is complete but not entirely correct. $ 141.48 X c. The market risk premium is 9.50%. (Round your answer to 2 decimal places.)

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 26SP

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