Question: PLEASE SHOW ME HOW TO DO IT ON EXCEL!!! I UNDERSTAND HOW TO DO IT BY HAND, PLEASE SCREENSHOT AND SHOW ME TABLES ON EXCEL.

PLEASE SHOW ME HOW TO DO IT ON EXCEL!!!

PLEASE SHOW ME HOW TO DO IT ON EXCEL!!! I UNDERSTAND HOW

I UNDERSTAND HOW TO DO IT BY HAND, PLEASE SCREENSHOT AND SHOW ME TABLES ON EXCEL.

I found the correct value of the required rate of return and the dividends. I also then used the constant growth rate. 3.08/(.123-.07) = 58.11 and then I believe I have to add back in the dividend from year 2? So that equals 60.99. I am trying to then use the NPV function in Excel but it isn't giving me the right answer.

I put in =NPV(0.123, 2.4, 2.88, 60.99) and it gives me $47.49 which is incorrect.

Correct answer is $50.50 but I just want to know how to get there using Excel. Thanks!

(7-9) Nonconstant Dividend Growth Valuation A company currently pays a dividend of $2 per share (Do = $2). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years and then at a constant rate of 7% thereafter. The company's stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock's current price

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!