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Video Excel Online Structured Activity: Constant growth You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places. Do not round your intermediate calculations. 2$ Check My Work Reset Problem Excel template - Saved File Home Insert Data Review View Help Tell me what you want to do X Cut (B Copy Arial v 10 A* A" ab Percentage S AutoSum v в IUD ab Conditional Paste $ • % 9 68 8 Format .00 Insert Delete Format O Clear v Sort & Find & Format Painter Formatting as Table Filter - Select Undo Clipboard Font Alignment Number Tables Cells Editing B11 A G. Н 1 Constant growth 2 3 Expected year-end dividend (D,) $1.50 4 Beta coefficient 0.90 5 Risk-free rate (FRE) 6 Market risk premium (RPM) 7 Current stock price (Po) ) 2.70% 4.50% $35.00 8 Market in equilibrium Yes Formulas 10 Calculate required return: 11 Required return on common stock #N/A 12 13 Calculate constant growth rate, g: 14 Total retum on common stock #N/A 15 Expected dividend yield #N/A 16 Expected capital gains yield #N/A 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P, using Po 3 #N/A 21 22 Alternative calculation: Calculate P, using dividends Sheet1 a 23 #N/A

Video Excel Online Structured Activity: Constant growth You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places. Do not round your intermediate calculations. 2$ Check My Work Reset Problem Excel template - Saved File Home Insert Data Review View Help Tell me what you want to do X Cut (B Copy Arial v 10 A* A" ab Percentage S AutoSum v в IUD ab Conditional Paste $ • % 9 68 8 Format .00 Insert Delete Format O Clear v Sort & Find & Format Painter Formatting as Table Filter - Select Undo Clipboard Font Alignment Number Tables Cells Editing B11 A G. Н 1 Constant growth 2 3 Expected year-end dividend (D,) $1.50 4 Beta coefficient 0.90 5 Risk-free rate (FRE) 6 Market risk premium (RPM) 7 Current stock price (Po) ) 2.70% 4.50% $35.00 8 Market in equilibrium Yes Formulas 10 Calculate required return: 11 Required return on common stock #N/A 12 13 Calculate constant growth rate, g: 14 Total retum on common stock #N/A 15 Expected dividend yield #N/A 16 Expected capital gains yield #N/A 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P, using Po 3 #N/A 21 22 Alternative calculation: Calculate P, using dividends Sheet1 a 23 #N/A

Essentials Of Investments
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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Video Excel Online Structured Activity: Constant growth You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places. Do not round your intermediate calculations. 2$ Check My Work Reset Problem
Transcribed Image Text:Video Excel Online Structured Activity: Constant growth You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places. Do not round your intermediate calculations. 2$ Check My Work Reset Problem
Excel template - Saved File Home Insert Data Review View Help Tell me what you want to do X Cut (B Copy Arial v 10 A* A" ab Percentage S AutoSum v в IUD ab Conditional Paste $ • % 9 68 8 Format .00 Insert Delete Format O Clear v Sort & Find & Format Painter Formatting as Table Filter - Select Undo Clipboard Font Alignment Number Tables Cells Editing B11 A G. Н 1 Constant growth 2 3 Expected year-end dividend (D,) $1.50 4 Beta coefficient 0.90 5 Risk-free rate (FRE) 6 Market risk premium (RPM) 7 Current stock price (Po) ) 2.70% 4.50% $35.00 8 Market in equilibrium Yes Formulas 10 Calculate required return: 11 Required return on common stock #N/A 12 13 Calculate constant growth rate, g: 14 Total retum on common stock #N/A 15 Expected dividend yield #N/A 16 Expected capital gains yield #N/A 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P, using Po 3 #N/A 21 22 Alternative calculation: Calculate P, using dividends Sheet1 a 23 #N/A
Transcribed Image Text:Excel template - Saved File Home Insert Data Review View Help Tell me what you want to do X Cut (B Copy Arial v 10 A* A" ab Percentage S AutoSum v в IUD ab Conditional Paste $ • % 9 68 8 Format .00 Insert Delete Format O Clear v Sort & Find & Format Painter Formatting as Table Filter - Select Undo Clipboard Font Alignment Number Tables Cells Editing B11 A G. Н 1 Constant growth 2 3 Expected year-end dividend (D,) $1.50 4 Beta coefficient 0.90 5 Risk-free rate (FRE) 6 Market risk premium (RPM) 7 Current stock price (Po) ) 2.70% 4.50% $35.00 8 Market in equilibrium Yes Formulas 10 Calculate required return: 11 Required return on common stock #N/A 12 13 Calculate constant growth rate, g: 14 Total retum on common stock #N/A 15 Expected dividend yield #N/A 16 Expected capital gains yield #N/A 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P, using Po 3 #N/A 21 22 Alternative calculation: Calculate P, using dividends Sheet1 a 23 #N/A
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