Question
I want to know the answer for part B!! No need to solve part A but I put the description of part A as a
I want to know the answer for part B!!
No need to solve part A but I put the description of part A as a reference. Company DBC has just paid a dividend of $3. As DBC is a young company and successful, it is estimated that they will grow at rate of 20% for 5 years and then at 3% in perpetuity. The company faces a required return on equity of 7%. What is the current price of the companys stock using the DDM model? Use excel for all calculations.
B.Describe how sensitive your calculation in part A is to changes in the perpetual growth rate, the required return on equity and the initial dividend. Graph your results over a range of variables both above and below that described in part A. For which variable is the share price most sensitive? Why? Use excel for all calculations.
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