Apple has just paid an annual dividend of $3.5. Dividends are expected to grow by 22%...

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Finance

Apple has just paid an annual dividend of $3.5. Dividends areexpected to grow by 22% per year for the next 4 years, and thengrow by 14% thereafter. Apple has an annual required return of31%.
a) What is the value of the expected dividends in fouryears?
b) What is the intrinsic value in the fourth year (V4)?
c) What is the value of the stock now (V0)?

Answer & Explanation Solved by verified expert

4.0 Ratings (749 Votes)

a The value of the expected dividends in four years Current Dividend 1 Growth Rate Time 35 1 22100 4 775367096 Hence the correct answer is 775 b Intrinsic value in the See Answer

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Apple has just paid an annual dividend of $3.5. Dividends areexpected to grow by 22% per year for the next 4 years, and thengrow by 14% thereafter. Apple has an annual required return of31%.a) What is the value of the expected dividends in fouryears?b) What is the intrinsic value in the fourth year (V4)?c) What is the value of the stock now (V0)?