Question: Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only

Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return.

a. What value would Dritter place on the stock?

b. Add a new row to Table 7.4 for a new investor, Zehnte, who has a 10-year horizon.

Rework Table 7.4 for horizon years 1, 2, 3, and


Hortzon (years) PV (dlvidends)+ PV (terminal priceValue per Share 10 20 30 50 100 $2.68 5.26 7.75 22.87 38.76 49.81 62.83 73.02 $72.32 69.74 67.25 52.13 36.24 25.19 12.17 1.98 $75 75 75 75 75 75 75 75

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