For each of the following scenarios determine the value as of the beginning of 2012 of the continuing dividend: Scenario A Scenario B Scenario C (Amounts in thousands) ANS: Forecast of Long-Run Cost of Dividend in Growth Capital year 2016 Forecast Scenario A Scenario B $28 $54 $123 Forecast of Dividend in year 2016 Scenario C (Amounts in thousands) $28 $54 $123 4% 9% 5% 4% Long-Run Cost of Growth Forecast Capital 9% 11% 5% 15% 14% 11% 15% 14% Continuing value Dividend Perpetuity Beginning Beginning in 2017 with of 2017 of 2012 growth $29.12 14.286 $416.00 $58.86 16.667 $981.00 $129.15 11.111 $1.435.00 $246.88 $487.73 $745.29

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
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L 3 

5. For each of the following scenarios determine the value as of the beginning of 2012 of the continuing
dividend:
Scenario A
Scenario B
Scenario C
(Amounts in thousands)
ANS:
Forecast of Long-Run Cost of
Growth Capital
Dividend in
year 2016
Forecast
Scenario A
$28
Scenario B
Scenario C
(Amounts in thousands)
Forecast of
Dividend in
year 2016
$54
$123 5% 14%
$28
$54
4%
$123
9% 15%
11%
Continuing value
Long-Run Cost of Dividend Perpetuity Beginning Beginning
Growth
Capital
in 2017
with
of 2017
of 2012
Forecast
growth
4%
9%
5%
11%
$29.12
15% $58.86
14% $129.15
14.286
$416.00
16.667 $981.00
11.111 $1,435.00
$246.88
$487.73
$745.29
Transcribed Image Text:5. For each of the following scenarios determine the value as of the beginning of 2012 of the continuing dividend: Scenario A Scenario B Scenario C (Amounts in thousands) ANS: Forecast of Long-Run Cost of Growth Capital Dividend in year 2016 Forecast Scenario A $28 Scenario B Scenario C (Amounts in thousands) Forecast of Dividend in year 2016 $54 $123 5% 14% $28 $54 4% $123 9% 15% 11% Continuing value Long-Run Cost of Dividend Perpetuity Beginning Beginning Growth Capital in 2017 with of 2017 of 2012 Forecast growth 4% 9% 5% 11% $29.12 15% $58.86 14% $129.15 14.286 $416.00 16.667 $981.00 11.111 $1,435.00 $246.88 $487.73 $745.29
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