Excel Online Structured Activity: Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 35% per year - during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet If the required return on Computech is 14%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations. Reset Problem

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Excel Online Structured Activity: Nonconstant growth
Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However,
investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should
grow rapidly - at a rate of 35% per year - during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. The data has been
collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
Open spreadsheet
If the required return on Computech is 14%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your
intermediate calculations.
Check My Work
Reset Problem
Transcribed Image Text:Video Excel Online Structured Activity: Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 35% per year - during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet If the required return on Computech is 14%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations. Check My Work Reset Problem
1
2
3
Nonconstant growth
Year 3 Dividend. Dy
Supernormal growth rate, g
4
5 Normal growth rate, g
6 Required retur, f
7
8
9 Dividends
10 P
11 Cash flows to common stockholders
12
13 PV of cash flows to common stockholders
14 Stock Price, P
15
16 Aternatively, using Excel NPV function
17 Stock Price, P
18.
19
20
21
22
23
Dividends
Formulas
24 Ps
25 Cash Bows to common stockholders
26
A qut
$0.75
35.00%
4.00%
14.00%
0
0
0
$0.75
$0.7500
SNA
35.00%
35,00%
MNIA
SNA
G
35.00%
35,00%
5
NA
#N/A
SNA
H
4.00%
4.00%
SNA
Transcribed Image Text:1 2 3 Nonconstant growth Year 3 Dividend. Dy Supernormal growth rate, g 4 5 Normal growth rate, g 6 Required retur, f 7 8 9 Dividends 10 P 11 Cash flows to common stockholders 12 13 PV of cash flows to common stockholders 14 Stock Price, P 15 16 Aternatively, using Excel NPV function 17 Stock Price, P 18. 19 20 21 22 23 Dividends Formulas 24 Ps 25 Cash Bows to common stockholders 26 A qut $0.75 35.00% 4.00% 14.00% 0 0 0 $0.75 $0.7500 SNA 35.00% 35,00% MNIA SNA G 35.00% 35,00% 5 NA #N/A SNA H 4.00% 4.00% SNA
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