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Problem 18-18 Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three-stage growth model of Spreadsheet 18.1. Treat
Problem 18-18 Calculate the intrinsic value of Rio Tinto 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 10.70%. (Round your answer to 2 decimal places.) Intrinsic value b. Rio Tinto's actual beta is 1.09. (Round your answer to 2 decimal places.) Intrinsic value C. The market risk premium is 9.90%. (Round your answer to 2 decimal places.) Intrinsic value A B E H Inputs for GE Year Dividend Div growth Term value Investor CF beta 1.5 2019 3. 12 3. 12 mkt_prem 0.08 2020 3. 38 3. 38 rf 0.029 2021 3. 64 3. 64 k_equity 0. 1490 2022 3. 90 3. 90 term_gwth 0.098 2023 4. 19 0.0740 4. 19 2024 4. 51 0.0764 4. 51 2025 4. 86 0.0788 4. 86 2026 5. 26 0. 0812 5. 26 2027 5. 70 0.0836 5. 70 2028 6. 19 0. 0860 6. 19 Value line 2029 6. 74 0.0884 6. 74 forecasts of 2030 7. 35 0. 0908 7. 35 annual dividends 2031 8. 03 0.0932 8. 03 2032 8. 80 0.0956 8. 80 2033 9. 66 0.0980 9. 66 Transitional period 2034 10. 61 0.0980 228. 41 239.02 with slowing dividend growth 53. 24+ PV of CF Beginning of constant E17 * (1+ F17)/ (B5 - F17) growth period NPV (B5, H2:H17)
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