4. Expected dividends as a basis for stock values The following graph shows the value of a stock's dividends over time. The stock current dividend is $1.00 per share, and dividends are expected to grow at a constant rate of 4.50% per year. The intrinsic value of a stock should equal the sum of the present value (PV) of wor the dividends that stock is supposed to pay in the future, but many people find it difficult to imagine adding up an infinite number of dividends. Calculate the present value (PV) of the dividend paid today (0) and the discounted value of the dividends expected to be paid 10, 20, and so on from now (D.D. Dsa). Assume that the stocks required return) 5.40 Note: Carry and round the calculations to four decimal places Dividend's Expected Future Value Dividend's Expected Present Value Time Period Now End of Year 10 End of Year 20 End of Year 50 Using the blue curve (circle symbols), plot the future value of each of the expected future dividends for years 10, 20, and So. The resulting curve will illustrate how the IV of a particular dividend payment will increase depending on how far from today the dividend is expected to be received Note: Round each of the discounted values of the dividends to the nearest tenth decimal place before plotting it on the graph. You can mouse over the points in the graph to see their coordinates (? OYA BAT000" Wy0031163292003005_ORANS Using the blue curve (circle symbols), plot the future value of each of the expected future dividends for years 10, 20, and 50. The resulting curve will illustrate how the FV of a particular dividend payment will increase depending on how far from today the dividend is expected to be received Note: Round each of the discounted values of the dividends to the nearest tenth decimal place before plotting it on the graph you can mouse over the points in the graph to see their coordinates. 2 16.00 Expected Divide 200 TV of Dividends 2. DIVIDENDS (5) 4.00 2.00 PV of Dividends A A 0 40 30 20 YEARS Grade It Now Save & Continue arpadly-00213856202003006 DAAA701770077175CHATOOOO