F H. Inputs for GE Year Dividend Div growth Term value Investor CF beta 1.1 2017 1.04 1.04 mkt_prem 0.08 2018 1.23 1.23 rf 0.025 2019 1.41 1.41 k_equity term gwth 0.1130 2020 1.60 1.60 0.060 2021 1.85 0.1544 1.85 2022 2.11 0.1450 2.11 2023 2.40 0.1355 2.40 2024 2.70 0.1261 2.70 2025 3.02 0.1166 3.02 2026 3.34 0.1072 3.34 Value line 2027 3.67 0.0978 3.67 forecasts of 2028 3.99 0.0883 3.99 annual dividends 2029 4.31 0.0789 4.31 2030 4.61 0.0694 4.61 2031 4.89 0.0600 4.89 Transitional period 2032 5.18 .0600 103.57 108.75 with slowing dividend growth 35.70 =PV of CF Beginning of constant growth period E17 (1+F17)/(B5 -F17) NPV(B5,H2:H17)
F H. Inputs for GE Year Dividend Div growth Term value Investor CF beta 1.1 2017 1.04 1.04 mkt_prem 0.08 2018 1.23 1.23 rf 0.025 2019 1.41 1.41 k_equity term gwth 0.1130 2020 1.60 1.60 0.060 2021 1.85 0.1544 1.85 2022 2.11 0.1450 2.11 2023 2.40 0.1355 2.40 2024 2.70 0.1261 2.70 2025 3.02 0.1166 3.02 2026 3.34 0.1072 3.34 Value line 2027 3.67 0.0978 3.67 forecasts of 2028 3.99 0.0883 3.99 annual dividends 2029 4.31 0.0789 4.31 2030 4.61 0.0694 4.61 2031 4.89 0.0600 4.89 Transitional period 2032 5.18 .0600 103.57 108.75 with slowing dividend growth 35.70 =PV of CF Beginning of constant growth period E17 (1+F17)/(B5 -F17) NPV(B5,H2:H17)
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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Question
Transcribed Image Text:B
C
Inputs for GE
Year
Dividend
Div growth
Term value
Investor CF
beta
1.1
2017
1.04
1.04
mkt prem
0.08
2018
1.23
1.23
rf
0.025
2019
1.41
1.41
k_equity
term gwth
0.1130
2020
1.60
1.60
0.060
2021
1.85
0.1544
1.85
2022
2.11
0.1450
2.11
2023
2.40
0.1355
2.40
2024
2.70
0.1261
2.70
2025
3.02
0.1166
3.02
2026
3.34
0.1072
3.34
Value line
2027
3.67
0.0978
3.67
forecasts of
2028
3.99
0.0883
3.99
annual dividends
2029
4.31
0.0789
4.31
2030
4.61
0.0694
4.61
2031
4.89
0.0600
4.89
Transitional period
2032
5.18
0.0600
103.57
108.75
with slowing dividend
growth
35.70 PV of CF
Beginning of constant
growth period
E17 (1+F17)/(B5 -F17)
NPV(B5,H2:H17)
Problem 18-15
Calculate the intrinsic value of GE 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 9.10%. (Round your answer to 2 decimal places.)
O Answer is complete but not entirely correct.
Intrinsic
value
63.34 O
E.
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