Question

Asked Nov 24, 2019

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I need help with this problem and how to set it up in excel with formulas.

Step 1

a) Since dividends are paid quarterly and both the growth rate and required rate of return are compounded quarterly, price of the stock can be calculated as below. Note: answer is highlighted in yellow, with all the workings shown separately.

Excel workings:

Step 2

Answer: Price of the stock today is $63.32

Step 3

b) When the first dividend is $1.75 and is expected to grow at 4.8% compounded qu...

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