Question: PLEASE SHOW A STEP BY STEP SOLUTION USING EXCEL. I NEED TO UNDERSTAND HOW WE GOT THE ANSWER Chapman Inc. s Mexican subsidiary, V. Gomez

PLEASE SHOW A STEP BY STEP SOLUTION USING EXCEL. I NEED TO UNDERSTAND HOW WE GOT THE ANSWER

Chapman Inc. s Mexican subsidiary, V. Gomez Corporation, is expected to pay toChapman 50 pesos in dividends in 1 year after all foreign and U.S. taxes have beensubtracted. The exchange rate in 1 year is expected to be 0.10 dollars per peso. After this,the peso is expected to depreciate against the dollar at a rate of 4% a year forever dueto the different inflation rates in the United States and Mexico. The peso-denominateddividend is expected to grow at a rate of 8% a year indefinitely. Chapman owns 10 millionshares of V. Gomez. What is the present value of the dividend stream, in dollars, assumingV. Gomez s cost of equity is 13%?

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