Video Excel Online Structured Activity: Constant growth You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places. Do not round your intermediate calculations. 2$ Check My Work Reset Problem Excel template - Saved File Home Insert Data Review View Help Tell me what you want to do X Cut (B Copy Arial v 10 A* A" ab Percentage S AutoSum v в IUD ab Conditional Paste $ • % 9 68 8 Format .00 Insert Delete Format O Clear v Sort & Find & Format Painter Formatting as Table Filter - Select Undo Clipboard Font Alignment Number Tables Cells Editing B11 A G. Н 1 Constant growth 2 3 Expected year-end dividend (D,) $1.50 4 Beta coefficient 0.90 5 Risk-free rate (FRE) 6 Market risk premium (RPM) 7 Current stock price (Po) ) 2.70% 4.50% $35.00 8 Market in equilibrium Yes Formulas 10 Calculate required return: 11 Required return on common stock #N/A 12 13 Calculate constant growth rate, g: 14 Total retum on common stock #N/A 15 Expected dividend yield #N/A 16 Expected capital gains yield #N/A 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P, using Po 3 #N/A 21 22 Alternative calculation: Calculate P, using dividends Sheet1 a 23 #N/A
Video Excel Online Structured Activity: Constant growth You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. Open spreadsheet Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places. Do not round your intermediate calculations. 2$ Check My Work Reset Problem Excel template - Saved File Home Insert Data Review View Help Tell me what you want to do X Cut (B Copy Arial v 10 A* A" ab Percentage S AutoSum v в IUD ab Conditional Paste $ • % 9 68 8 Format .00 Insert Delete Format O Clear v Sort & Find & Format Painter Formatting as Table Filter - Select Undo Clipboard Font Alignment Number Tables Cells Editing B11 A G. Н 1 Constant growth 2 3 Expected year-end dividend (D,) $1.50 4 Beta coefficient 0.90 5 Risk-free rate (FRE) 6 Market risk premium (RPM) 7 Current stock price (Po) ) 2.70% 4.50% $35.00 8 Market in equilibrium Yes Formulas 10 Calculate required return: 11 Required return on common stock #N/A 12 13 Calculate constant growth rate, g: 14 Total retum on common stock #N/A 15 Expected dividend yield #N/A 16 Expected capital gains yield #N/A 17 18 Calculate stock price in 3 years, P3: 19 Number of years from today 20 Calculate P, using Po 3 #N/A 21 22 Alternative calculation: Calculate P, using dividends Sheet1 a 23 #N/A
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 9P: Constant Growth Valuation Crisp Cookwares common stock is expected to pay a dividend of 3 a share at...
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Transcribed Image Text:Video
Excel Online Structured Activity: Constant growth
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D, = $1.50) and has a beta of 0.9. The
risk-free rate is 2.7%, and the market risk premium is 4.5%. Justus currently sells for $35.00 a share, and its dividend is expected to grow at some constant rate, g. The data has
been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.
Open spreadsheet
Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is P3?) Round your answer to two decimal places.
Do not round your intermediate calculations.
2$
Check My Work
Reset Problem
Transcribed Image Text:Excel
template - Saved
File
Home
Insert
Data
Review
View
Help
Tell me what you want to do
X Cut
(B Copy
Arial
v 10
A* A"
ab
Percentage
S AutoSum v
в IUD ab
Conditional
Paste
$ • % 9 68 8
Format
.00
Insert Delete Format
O Clear v
Sort & Find &
Format Painter
Formatting as Table
Filter - Select
Undo
Clipboard
Font
Alignment
Number
Tables
Cells
Editing
B11
A
G.
Н
1 Constant growth
2
3 Expected year-end dividend (D,)
$1.50
4 Beta coefficient
0.90
5 Risk-free rate (FRE)
6 Market risk premium (RPM)
7 Current stock price (Po)
)
2.70%
4.50%
$35.00
8 Market in equilibrium
Yes
Formulas
10 Calculate required return:
11 Required return on common stock
#N/A
12
13
Calculate constant growth rate, g:
14 Total retum on common stock
#N/A
15 Expected dividend yield
#N/A
16
Expected capital gains yield
#N/A
17
18 Calculate stock price in 3 years, P3:
19 Number of years from today
20 Calculate P, using Po
3
#N/A
21
22 Alternative calculation:
Calculate P, using dividends
Sheet1 a
23
#N/A
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