The Kilgon Corp. is experiencing rapid growth. Dividends are expected to grow at 30 percent per year during the next three years, 18 percent over the following year, and then 8 percent per year indefinitely. The required return on this stock is 11 percent, and the stock currently sells for $65 per share. What is the projected dividend for the coming year? How do you use Goal Seek to find the dividends? (Excel)
The Kilgon Corp. is experiencing rapid growth. Dividends are expected to grow at 30 percent per year during the next three years, 18 percent over the following year, and then 8 percent per year indefinitely. The required return on this stock is 11 percent, and the stock currently sells for $65 per share. What is the projected dividend for the coming year? How do you use Goal Seek to find the dividends? (Excel)
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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The Kilgon Corp. is experiencing rapid growth. Dividends are expected to grow at 30 percent per year during the next three years, 18 percent over the following year, and then 8 percent per year indefinitely. The required return on this stock is 11 percent, and the stock currently sells for $65 per share. What is the projected dividend for the coming year?
How do you use Goal Seek to find the dividends? (Excel)
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Step 1: Introduction
VIEWStep 2: Calculation of dividend for the next year (D1) using the growth rate for the next year (30 percent):
VIEWStep 3: Calculation of the dividend for the year following that year (D2) using the growth rate:
VIEWStep 4: Calculation of the dividend for the years beyond the next year using the long-term growth rate
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