Question: 4. Expected dividends as a basis for stock values The following graph show grow at a constant rate of 4.50% per year. The intrinsic value

4. Expected dividends as a basis for stock values The following graph show 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 all of the dividends that a 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 (D1) and the discounted value of the dividends expected to be paid 10,20 , and 50 years from now ( D10,D20,D50 ). Assume that the stock's required return ( r1) is 5.40%. Note: Carry and round the calculations to four decimal places. 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 PV of a particular dividend payment will increase depending on how far from today the dividend is expected to be recelved. 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. ANSWER CHOICES: Dividend's Expected Future Time Period Value Now End of Year 10 a. $1.3609 b. $1.5530 c. $1.2462 d. $1,1412 End of Year a. $2.5202 20 b. $1.9353 c. $2.1134 d. $2,4117 End of Year a. $7.9153 50 Dividend's Expected Present Value a. $0.1000 b. $20.000 c. $1.0000 d. $10.000 a. $0.9746 b. $0.9580 c. $0.9178 d. $0.9418 a. $0.8424 b. $0.8793 c. $0.8644 d. $0.8352 a. $0.6569 b. $0.6513 c. $0.6348 d. $0.6683

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