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Assume it is January 1, 2021. Cummins, Inc. (CUM), the diesel and natural gas engine manufacturer, is currently selling for $255. Dividends for 2021 are

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Assume it is January 1, 2021. Cummins, Inc. (CUM), the diesel and natural gas engine manufacturer, is currently selling for $255. Dividends for 2021 are expected to be $5.42 per share. We believe that dividends in 2022 will be $5.68 and dividends in 2023 will be $5.94. At the end of 2023, Value Line predicts the price to be around $280 per share. Our required rate of return is 8%. Using the Discounted Cash Flow stock valuation model (Value of stock present value of future dividends + present value of price of stock when you plan to sell), calculate the stock valuation Should we consider buying this company? (3 points)

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