Beasley Ball Bearings paid a $4 dividend last year. The dividend is expected to grow at a constant rate of 6 percent over the next four years. The required rate of return is 20 percent (this will also serve as the discount rate in this problem). Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Compute the anticipated value of the dividends for the next four years.

Anticipated Value

D1?

D2?

D3?

D4?

Calculate the present value of each of the anticipated dividends at a discount rate of 20 percent.

PV of Dividends

d1

D2

D3

D4

Total