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In Valuation (Workbook 11), we will introduce the concept of valuing a stock as the Net Present Value (NPV) of future cash flows (Discunted Cash
In Valuation (Workbook 11), we will introduce the concept of valuing a stock as the Net Present Value (NPV) of future cash flows (Discunted Cash Flows or DCF). 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 2022 and increasing the dividend by 5% every year thereafter. In the yellow cells below write formulas to calculate the expected dividend in each year. 2020 2021 2022 2023 2024 Terminal Dividend/Share $ $ $ The Equity Analyst has selected to apply a 10% discount rate in today's market conditions. In Cell G109 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 109
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