Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each scenario
Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each scenario independently.
The information you need is this the pictures
Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each scenario independently. a. The terminal growth rate will be 9.60%. (Round your answer to 2 decimal places.) Intrinsic value b. Rio Tinto's actual beta is 1.07. (Round your answer to 2 decimal places.) Intrinsic value c. The market risk premium is 9.70%. (Round your answer to 2 decimal places.) Intrinsic value Dividend 1 0.08 Inputs for GE beta mkt_prem rf k_equity term_gwth 0.029 0.1090 0.096 Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Div growth Term value 3.12 3.38 3.64 3.90 4.19 0.0740 4.51 0.0762 4.86 0.0784 5.25 0.0806 5.69 0.0828 6.17 0.0850 6.71 0.0872 7.31 0.0894 7.98 0.0916 8.73 0.0938 9.57 0.0960 10.48 0.0960 883.84 Investor CF 3.12 3.38 3.64 3.90 4.19 4.51 4.86 5.25 5.69 6.17 6.71 7.31 7.98 8.73 9.57 894.32 Value line forecasts of annual dividends 2030 2031 2032 2033 2034 Transitional period with slowing dividend growth 206.07) = PV of CF G50 * (1+ H50)/(C38 - C39) Beginning of constant growth period NPV(C38,335:350) Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each scenario independently. a. The terminal growth rate will be 9.60%. (Round your answer to 2 decimal places.) Intrinsic value b. Rio Tinto's actual beta is 1.07. (Round your answer to 2 decimal places.) Intrinsic value c. The market risk premium is 9.70%. (Round your answer to 2 decimal places.) Intrinsic value Dividend 1 0.08 Inputs for GE beta mkt_prem rf k_equity term_gwth 0.029 0.1090 0.096 Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Div growth Term value 3.12 3.38 3.64 3.90 4.19 0.0740 4.51 0.0762 4.86 0.0784 5.25 0.0806 5.69 0.0828 6.17 0.0850 6.71 0.0872 7.31 0.0894 7.98 0.0916 8.73 0.0938 9.57 0.0960 10.48 0.0960 883.84 Investor CF 3.12 3.38 3.64 3.90 4.19 4.51 4.86 5.25 5.69 6.17 6.71 7.31 7.98 8.73 9.57 894.32 Value line forecasts of annual dividends 2030 2031 2032 2033 2034 Transitional period with slowing dividend growth 206.07) = PV of CF G50 * (1+ H50)/(C38 - C39) Beginning of constant growth period NPV(C38,335:350)Step 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