Pacific Healthcare is an investor-owned hospital chain. Pacifics stock is currently selling for $8 per share, current dividend is $0.48 per share (paid on December 31, 2019), and the beta coefficient is 1.2. In addition, you learn that the yield on long-term Treasury bonds is 5.0 percent and that a market return of 11 percent is expected. Most analysts forecast that Pacific will grow about 10 percent per year for the next five years (2020-2024) and 4 percent per year thereafter (2025 and beyond). Based on these growth forecasts, you assembled the forecast dividends per share, as shown in the below exhibit. -

Year/Dividend: 2019/$0.480; 2020/$0.528; 2021/$0.581; 2022/$0.639; 2023/$0.703; 2024/$0.773; 2025/$0.804; 2026/$0.836

Excel Problem (Answers to highlighted cells): What is the estimated value on December 31, 2020, 2021, 2022, 2023, and 2024, assuming the stock is in equilibrium?

Estimated 2020-2024 value of Pacific Healthcare stock:
		2021	2022	2023	2024	PV
Year 2-5 dividends		$0.58	$0.64	$0.70	$0.77
Year 6+ dividends
Estimated value on December 31, 2020
			2022	2023	2024	PV
Year 3-5 dividends			$0.64	$0.70	$0.77
Year 6+ dividends
Estimated value on December 31, 2021