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Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only

Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. Current dividends are $5.70.

What value would Dritter place on the stock and what about Zehnte who has a 10-year horizon? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Horizion (Years) Pv (divdends) PV(terminal Price) Value per share
1
2
3
10

image text in transcribed

TABLE 7.4 Value of Blue Skies + Horizon (years) 1 2 Value per Share $75 75 3 75 PV (dividends) $2.68 5.26 7.75 22.87 38.76 49.81 62.83 73.02 10 20 30 50 100 PV (terminal price) $72.32 69.74 67.25 52.13 36.24 25.19 12.17 1.98 75 75 75 TABLE 7.4 Value of Blue Skies + Horizon (years) 1 2 Value per Share $75 75 3 75 PV (dividends) $2.68 5.26 7.75 22.87 38.76 49.81 62.83 73.02 10 20 30 50 100 PV (terminal price) $72.32 69.74 67.25 52.13 36.24 25.19 12.17 1.98 75 75 75

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