Question3 You are sing a dividend discout model to valoe a bunk, which is expected to generate a 15 un on equity in perpetuity. The company paid dividends of S40 million on set incom of SI00 milion in the me recest year and is expected to maintain high prowth for the net 3 years, before senling into stahle powth, powing a year in perpetuity If the cost of equity in 9. estimate the erminal value athe end year ). O SE25 millon O S1751 miicn O $2223.13 millice O $14104 milion
Question3 You are sing a dividend discout model to valoe a bunk, which is expected to generate a 15 un on equity in perpetuity. The company paid dividends of S40 million on set incom of SI00 milion in the me recest year and is expected to maintain high prowth for the net 3 years, before senling into stahle powth, powing a year in perpetuity If the cost of equity in 9. estimate the erminal value athe end year ). O SE25 millon O S1751 miicn O $2223.13 millice O $14104 milion
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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Transcribed Image Text:Question 3
You are using a dividend discount model to valoe a bank, which is expected to
generate a 15% retum on equity in perpetuity. The company paid dividends of St0 million on net income of S100 million in the most recent year and is expocted so aintain high growth for the next 3 years, before settling
into stable growth, growing 3% a year in perpetuity, If the cost of equity is 9%. estimate the terminal value at the end of year 3.
O 8889.25 million
O SITT8S1 million
O $2223.13 million
O $741.04 million
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