Answered step by step
Verified Expert Solution
Question
1 Approved Answer
16.45 doesnt work I will rate you, thanks Video Excel Online Structured Activity: Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain
16.45 doesnt work
I will rate you, thanks
Video Excel Online Structured Activity: Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 28% per year - during Years 4 and 5; but after Year 5, growth should be a constant 7% per year. 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 If the required return on Computech is 15%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations. $ Check My Work Reset Problem B D E F G H 1 I J $0.75 28.00% 7.00% 15.00% 28.00% 4 28.00% 5 7.00% 6 0 1 0 2 0 3 $0.75 0 0 A 1 Nonconstant growth 2 3 Year 3 Dividend, D, 4 Supernormal growth rate, gs 5 Normal growth rate, gn 6 Required return, rs 7 8 9 Dividends 10 P5 11 Cash flows to common stockholders 12 13 PV of cash flows to common stockholders 14 Stock Price, Po 15 16 Alternatively, using Excel NPV function: 17 Stock Price, Po 18 19 20 Formulas 21 22 23 Dividends 24 P5 25 Cash flows to common stockholders 26 27 PV of cash flows to common stockholders 28 Stock Price, Po 29 30 Alternatively, using Excel NPV function: 31 Stock Price, Po 32 33 0 1 1 0 2 0 3 $0.7500 28.00% 4 #N/A 28.00% 5 #N/A #N/A #N/A 7.00% 6 #N/A #/ 0 0 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/AStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started