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In Equity Valuation (Work book 11), we will introduce the concept of valuing a stock as the Net Present Value (NPV) of future cash
In Equity Valuation (Work book 11), we will introduce the concept of valuing a stock as the Net Present Value (NPV) of future cash flows (Discunted Cash Flows An Equity Analyst (a Financial Analyst that focuses on valuing stocks) needs to value the stock of a company. The company has recently gone through a period of financial stress and does not plan to pay a dividend this or next year. The company has stated its intent of reintroducing a dividend of $2.00 in 2024 and increasing the dividend by 5% every year thereafter. In the yellow cells below write formulas to calculate the expected dividend in each year. 0 (Current) 2022 1 2 3 4 5 2023 2024 2025 2026 Terminal Value Dividend/Share $ $ The Equity Analyst has selected to apply a 10% discount rate in today's market conditions. In Cell H85 write a formula that calculates the terminal value using the discount rate selected. In the yellow cell below write a formula that calculates the Net Present Value (NPV) of the dividend stream modeled in Row 85. Note: Remember that Excel treats the first value in the series to be discounted as Year 1 of the time series, which is discounted by (1+ Discount Rate)-year
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