Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

table [ [ table [ [ Inputs for GE ] ] , , , Year,Dividend, table [ [ Div growth ] ]

\table[[\table[[Inputs for GE]],,,Year,Dividend,\table[[Div growth]],Term value,Investor CF,],[beta,1.1,,2019,3.12,,,3.12,],[mkt_prem,0.08,,2020,3.38,,,3.38,],[rf,0.029,,2021,3.64,,,3.64,],[k_equity,0.1170,,2022,3.90,,,3.90,],[term_gwth,0.094,,2023,4.19,0.0740,,4.19,],[,,2024,4.51,0.0760,,4.51,],[,,2025,4.86,0.0780,,4.86,],[,,2026,5.25,0.0800,,5.25,],[,,2027,5.68,0.0820,,5.68,],[\sigma ,,2028,6.15,0.0840,,6.15,],[Value line,,,2029,6.68,0.0860,,6.68,],[forecasts of,,,2030,7.27,0.0880,,7.27,],[annual dividend,,,2031,7.93,0.0900,,7.93,],[,,2032,8.66,0.0920,,8.66,],[/_\,,2033,9.47,0.0940,,9.47,],[Transitional period,,2034,10.36,0.0940,492.73,503.09,],[with slowing dividend],[growth,,,,,T,,118.98,=PV of CF],[Beginning of constant,,E17^(**)(1+F17)/(B5-F17),,\bar (N),],[growth period,,,,,NPV(B5,H2:H17)]] 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 10.30%.(Round your answer to 2 decimal places.)
Answer is complete but not entirely correct.
b. Rio Tinto's actual beta is 1.05.(Round your answer to 2 decimal places.)
Answer is complete but not entirely correct.
c. The market risk premium is 9.50%.(Round your answer to 2 decimal places.)
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Finance The Markets And Financial Management Of Multinational Business

Authors: Maurice D. Levi

3rd Edition

0070376875, 978-0070376878

More Books

Students also viewed these Finance questions

Question

Please help me evaluate this integral. 8 2 2 v - v

Answered: 1 week ago

Question

Whats involved in listening?

Answered: 1 week ago