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Problem 18-15 Calculate the intrinsic value of GE in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each
Problem 18-15 Calculate the intrinsic value of GE in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each scenario independently, a. The terminal growth rate will be 7.00%. (Round your answer to 2 decimal places.) Intrinsic value b. GE's actual beta is 1.00. (Round your answer to 2 decimal places.) Intrinsic value c. The market risk premium is 9.00%. (Round your answer to 2 decimal places.) Intrinsic value E3 X V fi C =E2+(E$5-E$2)/3 D E B I J K L M N O A 1 Inputs for GE 2 beta 3 mkt_prem 4 rf 5 k_equity 6 term_gwth 1.11 0.08 0.025 0.1130 0.060 F G Dividend Div growth | Term value 1.04 1.23 1.41 1.60 1.85 0.1544 2.11 0.1450 2.40 0.1355 2.70 0.1261 3.02 0.1166 3.34 0.1072 3.67 0.0978 0.0883 4.31 0.0789 4.61 0.0694 4.89 0.0600 5.18 0.0600 103.57 Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 H Investor CF 1.04 1.23 1.41 1.60 1.85 2.11 2.40 2.70 3.02 3.34 3.67 3.99 4.31 4.61 4.89 108.75 9 10 11 12 Value line 13 forecasts of 14 annual dividends 15 / 3.99 16 17 Transitional period 18 with slowing dividend 19 growth Beginning of constant growth period 35.70 = PV of CF E17 * (1+ F17)/(B5 - F17) NPV(B5, H2:H17) Problem 18-15 Calculate the intrinsic value of GE in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat each scenario independently, a. The terminal growth rate will be 7.00%. (Round your answer to 2 decimal places.) Intrinsic value b. GE's actual beta is 1.00. (Round your answer to 2 decimal places.) Intrinsic value c. The market risk premium is 9.00%. (Round your answer to 2 decimal places.) Intrinsic value E3 X V fi C =E2+(E$5-E$2)/3 D E B I J K L M N O A 1 Inputs for GE 2 beta 3 mkt_prem 4 rf 5 k_equity 6 term_gwth 1.11 0.08 0.025 0.1130 0.060 F G Dividend Div growth | Term value 1.04 1.23 1.41 1.60 1.85 0.1544 2.11 0.1450 2.40 0.1355 2.70 0.1261 3.02 0.1166 3.34 0.1072 3.67 0.0978 0.0883 4.31 0.0789 4.61 0.0694 4.89 0.0600 5.18 0.0600 103.57 Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 H Investor CF 1.04 1.23 1.41 1.60 1.85 2.11 2.40 2.70 3.02 3.34 3.67 3.99 4.31 4.61 4.89 108.75 9 10 11 12 Value line 13 forecasts of 14 annual dividends 15 / 3.99 16 17 Transitional period 18 with slowing dividend 19 growth Beginning of constant growth period 35.70 = PV of CF E17 * (1+ F17)/(B5 - F17) NPV(B5, H2:H17)
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