Hello, I have this exercise of my Investment class with the answers but I need...
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Hello, I have this exercise of my Investment class with the answers but I need to know the manual procedure, step by step (not Excel) of how to reach those results. Could you help me? Thank you.
1.6 Q3 As an investor, you have given the following information for MN Company Last dividend The company's expected dividend growth 6% Your expectation about the growth rate for the next 3 years 9% the share price after 3 years (FV:) $30 You required rate of return (RROR) 15% Find the maximum amount that you be willing to pay for the stock. Period Dividend (D) Factor =(1+RROR)" = PV (D) PV (FV) Firm Value now 1.6 1.00 4.316325 $19.73 $24.04 1.744 1.15 1.516522 2 1.90096 1.32 1.437399 3 2.072046 1.52 1.362404 $19.73 Assume the same information above, but you expect the growth rate will be maintained indefinitely growth rate expected by you 9% RROR by you 15% Find the maximum amount that you be willing to pay for the stock. Last dividend 1.6 Share value 29.06667 Verify the formula
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