Suppose Walmart pays dividends once a year. It just paid out year 2017's dividend of $2.04 per share. Analysts' concensus forecast about its future dividends is as below: $2.10 for year 2018, $2.20 for year 2019, $2.30 for year 2020, $2.40 for year 2021, and $2.50 for year 2022. After year 2022, Walmart's annual dividend payments will grow at a constant rate of 3%. Suppose Walmart shareholders' required return is 6%. Estiimate Walmart's intrinsic value.

R

6.0%

g

3.0%

t

Cash flow

CF Amount

PV

1

Dividend 1

2

Dividend 2

3

Dividend 3

4

Dividend 4

5

Dividend 5

5

Horizon value

Intrinsic Value