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Hi, I need to solve this in excel but I am unsure how to proceed. If you could use values instead of cell references it
Hi, I need to solve this in excel but I am unsure how to proceed. If you could use values instead of cell references it would be much appreciated so I can learn the process and explanation.
Question 2: | |||
A company is expected to pay the dividend below next year. The expected plow-back ratio and the ROE of the company for the next 5 years are also provided, from which you can calculate the expected short-term growth rate of the company. The long-term growth rate (after the initial 5 years) and the required rate of return by the investors is provided as well. | |||
Dividend per share next year (D1) | 2,41 | ||
Plow-Back Ratio (first 5 years) | 0,56 | ||
ROE (first 5 years) | 20% | ||
Long-term growth rate | 8,30% | ||
Required rate of return | 15,00% | ||
(a) Calculate the share price of the company using the dividend discount model. | |||
(b) Create a sensitivity analysis table, showing the sensitivity of the share price to changes in (i) long-term growth rate and (ii) required rate of return, for the following ranges: | |||
Long-term growth rate | +/- 2% of the number given above | ||
Required rate of return | +/- 3% of the number given above | ||
(c) Create a tornado chart, presenting your results on the impact of changes in assumptions on the share price in part (b) | |||
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