89. 90. 91. 92. 93.
Dividends for the next three years are $.56, $1.12, and $2.24.
P3?$1.50.115; P3 = $13.04348; P0?$.56(1.115)1?$1.12(1.115)2?$2.24(1.115)3?$13.04348(1.115)3
P0 = $12.43
P5?$1.40.06; P5 = $23.333 P0?$.30(1.06)1?$.50(1.06)2?$.75(1.06)3?$1.00(1.06)4?$1.20(1.06)5?$23.333(1.06)5
P0 = $20.48
P0?$0(1.08)1?$2.00(1.08)2?$0(1.08)3?$2.00(1.08)4?$50.00(1.08)5
P0 = $37.21
P0?$1.20?(1?.10).14?(?.10); P0 = $4.50
$1.80?.90(1.13)1P3?.70.13; P3 = $5.3846 P0??$1.80?(.90)(1.13)22?$1.80?(.90)(1.13)33?$5.384615(1.13)3; P0 =
$7.22
94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108.
P2?1.00.09; P2 = $11.1111 P0?$1.40?.95(1.09)1?$1.40?(.95)(1.09)22?$11.1111(1.09)2
P0 = $11.64
P = $2.00 ? .09 = $22.22 R = $1.70 ? $20.24 = 8.40% D = .0658 ? $45.60 = $3.00 P0 = $4.50 ? .12 = $37.50
Value of stock = D0(1+g)/(r-g) = $2.25(1+0.05)/(0.11-0.05) = $39.375 $1.36/.125 = $10.88
g = (D1-D0)/D0 = ($1.03-$1.00)/$1.00 = 0.03 (g=3%) Value of stock = D1/(r-g) = $1.03/(0.05-0.03) = $51.50
Value of stock = [($0.75/1.1) + ($0.84/(1.1)2) + ($0.94/(1.1)3) + ($1.05/(1.1)4) + (($1.13/.02)/(1.1)-4) = $41.39
Div(8) = $0.4*(1+.07)6 (1.04)2 = $0.65
R = Div/P0 + g = (.381(1.056))/11.625)+.056 = (.40/11.625)+.056 = .0346 + .056 = .0906 = 9% Years 1-5: ($0.50(1.2)t/(1.12)t + (1.28/.09)/(1.12)5 = $11.17
Price = $1.00(1.20)/1.12 + $1.20(1.100)/1.2544 + [$1.32(1.05)/(.12-.05)]/1.2544 = $17.90 Price = $1.00(1.25)/1.12 + $1.25(1.25)/1.2544 + [$1.5625(1.05)/(.12-.05)]/1.2544 = $21.04 Value of stock = D1/(1+r) + (D2+P2)/(1+r)2 = $10/(1+0.09) + ($11+$120)/(1+0.09) 2 = $119.43