template - Saved Search for tools, help, and more (Alt + Q) File Home Insert Share Page Layout Formulas Data Review View Help Draw Arial A A BI U ab 開く Wrap Merge General H33 fx 1 Nonconstant growth 2 3 Year 3 Dividend, D $1.75 4 Supernormal growth rate, g 29.00% 5 Normal growth rate, g 8.00% 6 Required return, 16.00% 7 8 9 Dividends 10 Ps 11 Cash flows to common stockholders 13 PV of cash flows to common stockholders 14 Stock Price, Po 15 16 Alternatively, using Excel NPV function: 17 Stock Price, Po 29.00% 29.00% 8.00% $1.75 19 20 21 22 Formulas 29.00% 29.00% 8.00% 0 4 23 Dividends 24 P 25 Cash flows to common stockholders 26 27 PV of cash flows to common stockholders 28 Stock Price, Po $1.7500 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 29 30 Alternatively, using Excel NPV function: 31 Stock Price, Po N/A 33 34 35 37 Sheet1 + M R Editing Comments
template - Saved Search for tools, help, and more (Alt + Q) File Home Insert Share Page Layout Formulas Data Review View Help Draw Arial A A BI U ab 開く Wrap Merge General H33 fx 1 Nonconstant growth 2 3 Year 3 Dividend, D $1.75 4 Supernormal growth rate, g 29.00% 5 Normal growth rate, g 8.00% 6 Required return, 16.00% 7 8 9 Dividends 10 Ps 11 Cash flows to common stockholders 13 PV of cash flows to common stockholders 14 Stock Price, Po 15 16 Alternatively, using Excel NPV function: 17 Stock Price, Po 29.00% 29.00% 8.00% $1.75 19 20 21 22 Formulas 29.00% 29.00% 8.00% 0 4 23 Dividends 24 P 25 Cash flows to common stockholders 26 27 PV of cash flows to common stockholders 28 Stock Price, Po $1.7500 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 29 30 Alternatively, using Excel NPV function: 31 Stock Price, Po N/A 33 34 35 37 Sheet1 + M R Editing Comments
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
Related questions
Question
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 $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 29% per year - during Years 4 and 5; but after Year 5, growth should be a constant 8% 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 16%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.
$ fill in the blank 2
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template -Saved
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File
Home Insert Share
Page Layout
Formulas Data Review View
Help Draw
Arial
✓ 10
A A B I U ab D ✓ Gv
ab Wrap Merge v General
$
✓
H33
× ✓ fx
B
с
D
E
F
G
H
1
Nonconstant growth
2
3
Year 3 Dividend, D3
$1.75
4
Supernormal growth rate, gs
29.00%
5
Normal growth rate, gn
6 Required return, rs
8.00%
16.00%
7
8
9
Dividends
10 Ps
11
12
13
0
0
29.00%
29.00%
8.00%
4
$1.75
Cash flows to common stockholders
PV of cash flows to common stockholders
14 Stock Price, Po
15
16 Alternatively, using Excel NPV function:
17 Stock Price, Po
0
0
18
19
20
21
22
23
Dividends
Formulas
29.00%
29.00%
8.00%
0
2
3
4
5
6
0
0
$1.7500
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
223
24 Ps
25 Cash flows to common stockholders
26
27 PV of cash flows to common stockholders
28 Stock Price, Po
0
0
#N/A
#N/A
29
30 Alternatively, using Excel NPV function:
31 Stock Price, Po
#N/A
32
34
35
36
37
Sheet1
+
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