Question 5: Assuming at 3.5% expected growth rate, use the dividend discount model with constant growth to
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Question 5: Assuming at 3.5% expected growth rate, use the dividend discount model with constant growth to find the expected price of the stock at each level of borrowing. This model is: Stock Price = Dividend /(WACC - growth)
WACC Price
$50,000,000 6.62% $23.94
$100,000,000 6.54% $24.39
$150,000,000 6.47% $24.84
$200,000,000 6.40% $25.30
$250,000,000 6.32% $25.76
This is my set up of the model: $50,000,000/(6.62%-3.5% and I don't get the price.
Related Book For
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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