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Fastenal, a publicly traded distributor, has been paying dividends since 1 9 9 1 . Between 1 9 9 1 and 2 0 1 0
Fastenal, a publicly traded distributor, has been paying dividends since Between and dividends grew by annually, on average. Since the dividend growth slowed down significantly to a year.
The dividend in or D equals $ We estimate that starting in the dividend growth will slow down to for the next five years, and after that will remain at indefinitely.
If the interest rate is calculate Fastenal's stock price as of today using the nonconstant dividend growth method:
Calculate dividends for years through using the high growth rate
Calculate present value of dividends for years through using the required return rate of
Calculate dividend in year using the constant growth rate
Calculate P using the formula in cell G
This is the stock price five years in the future, so it needs to be discounted. Calculate its present value as of today
Add up present values of dividends for years through
Sum up and to calculate present value of the stock today
TwoStage Value of Stock
nd Stage
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