Suppose the Price/Earnings Ratio for the S&P 500 is 22 and the dividend payout ratio of the S&P

500 is 45%. The future growth rate of dividends is expected to be 4.80%. (USE EXCEL AND SHOW ALL FORMULAS)

a. Compute the expected return of the Market.

b. Use Goal Seek or Solver to determine the dividend growth rate that would yield an

expected Market return of 8%.

On Goal Seek please identify the..

i. Set Objective (Cell)

ii. To Value

iii. By Changing Variables Cell

iv. Subject to (if used