Spreadsheets are especially useful for computing stock value under different assumptions. Consider a firm that is expected

Question:

Spreadsheets are especially useful for computing stock value under different assumptions. Consider a firm that is expected to pay the following dividends:

and grow at 5 percent thereafter
A. Using an 11 percent discount rate, what would be the value of this stock?
B. What is the value of the stock using a 10 percent discount rate? A 12 percent discount rate?
C. What would the value be using a 6 percent growth rate after year 6 instead of the 5 percent rate using each of these three discount rates?
D. What do you conclude about stock valuation and its assumptions?