Pick a stock that starts with the letter "R" AND one that pays a dividend and has paid a dividend for the last 3 years (at least). Calculate the value of the stock using the dividend growth model (Show your work). Remember that this model won't work if the required return is less than the dividend growth rate.

P0 = (D0 x (1 + g)) / (k-g)

P0: price today

D0: Dividends last paid

K: Required rate of return

G: Dividend growth rate

For D0, take the most recent quarterly dividend and multiply it by 4 (if all four dividends are the same if not then add up the different dividends). For required rate of return, use the average return of an index that your stock is included in, or could he included in like the S&P 500 or DJIA)

For the dividend growth rate...

N= number of years

I= dividend growth rate. the variable you are solving for

PV= Sum of dividends 3 years ago. Watch out for anomalies, where maybe the stock split and the dividend changed substantially, and avoid that. Entered as a negative number.

PMT= 0

FV= Sum of the dividend in the most recent year. Entered as a positive number.

Post the price (P0) you derived from the dividend growth model, the current market price of the stock, and the P:E Ratio

Why do you think there is a difference between the price you calculated and the actual market price?