EXERCISE: You realize debt is too expensive for you to open a factory. Instead you decide to invest your money in an existing factory. After inquiring about investing in two factories you received two offers. We need to use the discount dividend method to select the best offer. Equity Stake1 Factory Aloffers $5.00 a share. Dividends are expected to grow at 6% per year and the current dividend is $1 per share. The expected rate of return is 20%. What should the current stock price be? Offer Price User (these fields are Model Output Dividend Dividend Final Answer Rate of (See Slide 10 of the equities lecture pdf for the dividend discount model) Discount Equity Price Profit Per Shai Percent Return #DIV/0! $0.00 #DIV/0! #DIV/0! Equity Stake 2 Factory B offers $6.50 a share. Dividends are expected to grow at 8% per year and the current dividend is $.80 per share. The expected rate of return is also 20%. Question 4: What should the current stock price be? Question 5: Which equity offer would you take? Offer Price User (these fields are Dividend Model Output Dividend Final Answer Rate of (See Slide 10 of the equities lecture pdf for the dividend discount model) Discount Equity Price Profit Per Shai Percent Return #DIV/0! $0.00 #DIV/0! #DIV/0! EXERCISE: You realize debt is too expensive for you to open a factory. Instead you decide to invest your money in an existing factory. After inquiring about investing in two factories you received two offers. We need to use the discount dividend method to select the best offer. Equity Stake1 Factory Aloffers $5.00 a share. Dividends are expected to grow at 6% per year and the current dividend is $1 per share. The expected rate of return is 20%. What should the current stock price be? Offer Price User (these fields are Model Output Dividend Dividend Final Answer Rate of (See Slide 10 of the equities lecture pdf for the dividend discount model) Discount Equity Price Profit Per Shai Percent Return #DIV/0! $0.00 #DIV/0! #DIV/0! Equity Stake 2 Factory B offers $6.50 a share. Dividends are expected to grow at 8% per year and the current dividend is $.80 per share. The expected rate of return is also 20%. Question 4: What should the current stock price be? Question 5: Which equity offer would you take? Offer Price User (these fields are Dividend Model Output Dividend Final Answer Rate of (See Slide 10 of the equities lecture pdf for the dividend discount model) Discount Equity Price Profit Per Shai Percent Return #DIV/0! $0.00 #DIV/0! #DIV/0