Review Help Editing Arial v10 E Me S 8 Styles v * Conditional Formatting v General onstant growth 3 Dividend D nomal growth rate, g. al growth rate, 0 red return, S0 50 46 00% 9.00% 18.00% 46 00% 46.00% 9.00% 3. S0 50 spua fows to conmon stockholders I cash flows to common stockholders Price, P atively, using Excel NPV function Price, P Formulas 46 00% 46 00% 9 00% 2. ends $0 5000 INA NIA NIA NIA flows to common stockholders NIA INIA NIA T cash flows to common stockholders SNIA NIA NIA
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 $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 46% per year - during Years 4 and 5; but after Year 5, growth should be a constant 9% 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.
If the required return on Computech is 18%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.
$ __________.
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Arial
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$ v 8 8 Conditional Formatting
90 $
10
.00
General
Styles v
C15
fx
A
Nonconstant growth
2.
3 Year 3 Dividend, Dy
4 Supernormal growth rate, g.
SNormal growth rate, g.
6 Required return, r.
7.
$0.50
46.00%
9.00%
18 00%
46.00%
46 00%
9 00%
3.
$0.50
4
9.
9.
Dividends
10 Ps
11 Cash flows to common stockholders
12
13 PV of cash flows to common stockholders
14 Stock Price, Po
15
16 Alternatively, using Excel NPV function.
17 Stock Price, Po
18
19
Formulas
20
21
22
46.00%
46.00%
9.00%
4
23 Dividends
0.
$0 5000
NIA
NIA
N/A
24 Ps
25 Cash flows to common stockholders
N/A
N/A
NIA
IN/A
26
27 PV of cash flows to common stockholders
N/A
EN/A
ENIA
N/A
EN/A
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