Question: Stocks Handout 1 Termial Values.docx Problem 1. You expect a stock to pay the following dividends in the future: 2 $2 3 $4.20 $1 4

Stocks Handout 1 Termial Values.docx Problem 1. You expect a stock

Stocks Handout 1 Termial Values.docx Problem 1. You expect a stock to pay the following dividends in the future: 2 $2 3 $4.20 $1 4 $3.15 After year 4, you expect the dividend to stay constant at the year 4 value forever. The terminal value is: The terminal value is true at time The PV of the terminal value is The PV of all the expected future CFs from the stock is Problem 2. You expect a stock to pay the following dividends in the future: 1 $1 2 $2 3 $4.20 4 $3.15 After year 4, you expect the dividend to grow at a constant rate of 3% forever. The terminal value is: The terminal value is true at time The PV of the terminal value is The PV of all the expected future CFs from the stock is Problem 3. You expect a stock to pay the following dividends in the future: 2 $2 3 $4.20 4 $3.15 S1 At the end of year 4. you expect the payout ratio to be 30% and the stock to sell for 15 times earnings The terminal value is: The terminal value is true at time The PV of the terminal value is The PV of all the expected future CFs from the stock is Stocks Handout 1 Termial Values.docx Problem 1. You expect a stock to pay the following dividends in the future: 2 $2 3 $4.20 $1 4 $3.15 After year 4, you expect the dividend to stay constant at the year 4 value forever. The terminal value is: The terminal value is true at time The PV of the terminal value is The PV of all the expected future CFs from the stock is Problem 2. You expect a stock to pay the following dividends in the future: 1 $1 2 $2 3 $4.20 4 $3.15 After year 4, you expect the dividend to grow at a constant rate of 3% forever. The terminal value is: The terminal value is true at time The PV of the terminal value is The PV of all the expected future CFs from the stock is Problem 3. You expect a stock to pay the following dividends in the future: 2 $2 3 $4.20 4 $3.15 S1 At the end of year 4. you expect the payout ratio to be 30% and the stock to sell for 15 times earnings The terminal value is: The terminal value is true at time The PV of the terminal value is The PV of all the expected future CFs from the stock is

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