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 11.50%. (Round your answer to 2 decimal places.) Intrinsic value b. Rio Tinto's actual beta is 1.06. (Round your answer to 2 decimal places.) Intrinsic value
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 11.50%. (Round your answer to 2 decimal places.) Intrinsic value b. Rio Tinto's actual beta is 1.06. (Round your answer to 2 decimal places.) Intrinsic value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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B7
1 Inputs for GE
2 betal
3 mkt_prem
4 rf
5 k_equity
6 term_gwth
7
8
9
10
11
23
24
25
⠀
12 Value line
13 forecasts of
14 annual dividends
15
26
27
28
X
29
30
16
17 Transitional period
18 with slowing dividend
19 growth
20
21
22
B
1.4
0.08
0.029
0.1410
0.106
с
✔
34
Spreadsheet_18.18 - Protected View
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D
Year
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Beginning of constant
growth period
E
DividendDiv growthTer
3.12
F
3. 38
3. 64
3.90
4.19
4.51
4.87
5. 28
5.74
6.26
6.84
7.50
8.25
9.09
10.06
11.13 0.1060
0.0740
0.0772
0.0804
0.0836
0.0868
0.0900
0.0932
0.0964
0.0996
0.1028
0.1060
E17 * (1+ F17) / (B5 - F17)
G
Search
Automate
H
valueinvestor CF
3.12
3.38
3. 64
3.90
4.19
4.51
4.87
5. 28
5.74
6. 26
6. 84
7.50
8. 25
9.09
10.06
362.68
351.55
I
72.90 PV of CF
NPV (B5, H2:H17)
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Transcribed Image Text: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 11.50%. (Round your answer to 2 decimal places.)
Intrinsic value
b. Rio Tinto's actual beta is 1.06. (Round your answer to 2 decimal places.)
Intrinsic value
c. The market risk premium is 10.70%. (Round your answer to 2 decimal places.)
Intrinsic value
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