Question: PLEASE GRAPH THE PROBLEM POSTING THIS FOR THE SECOND TIME. LAST PERSON ANSWERED INCORRECTLY. PLEASE MAKE SURE IT'S CORRECT. THANK YOU 4. Expected dividends as

 PLEASE GRAPH THE PROBLEM POSTING THIS FOR THE SECOND TIME. LAST

PLEASE GRAPH THE PROBLEM

PERSON ANSWERED INCORRECTLY. PLEASE MAKE SURE IT'S CORRECT. THANK YOU 4. ExpectedPOSTING THIS FOR THE SECOND TIME. LAST PERSON ANSWERED INCORRECTLY. PLEASE MAKE SURE IT'S CORRECT. THANK YOU

4. Expected dividends as a basis for stock values Aa Aa The following graph shows the value of a stock's dividends over time. The stock's current dividend is $1.00 per share, and dividends are expected to grow at a constant rate of 4.50% per year. The intrinsic value of a stock should equal the sum of the present value (PV) of all of the dividends that a stock is supposed to pay in the future, but many people find it difficult to imagine adding up an infinite number of dividends. Calculate the present value (PV) of the dividend paid today (Do) and the discounted value of the dividends expected to be paid 10 and 20 years from now (D10 and D20). Assume that the stock's required return (rs) is 5.40%. Note: Carry and round the calculations to four decimal places. Time Period Dividend's Expected Expected Dividend's Future Value Present Value Now End of Year 10 End of Year 20 End of Year 50 Using the blue curve (circle symbols), plot the future value of each of the expected future dividends for years 10, 20, and 50. The resulting curve will illustrate how the FV of a particular dividend payment will increase depending on how far from today the dividend is expected to be received. Note: Round each of the discounted values of the of dividends to the nearest tenth decimal place before plotting it on the graph. You can mouse over the points in the graph to see their coordinates. DIVIDENDS ($] 10.00 Expected Dividends 8.00 FV of Dividends 6.00 4.00 PV of Dividends 0.00 0 10 2030 40 50 60 YEARS Clear AlL

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!