Walmart has just paid an annual dividend of $3.57. Dividends are expected to grow by 9% for the next 4 years, and then grow by 3% thereafter. Walmart has a required return of 9%. What is the answer for part 2 and part 3?

Part 1

What is the expected dividend in four years?

Correct

Dividends during non-constant growth phase:

D1= D0(1+g1)=3.571.09=3.891D1= D0(1+g1)=3.571.09=3.891 D2= D0(1+g1)2=3.571.092=4.242D2= D0(1+g1)2=3.571.092=4.242 D3= D0(1+g1)3=3.571.093=4.623D3= D0(1+g1)3=3.571.093=4.623 D4=D0(1+g1)4=3.571.094=D4=D0(1+g1)4=3.571.094= 5.04

Part 2

What is the terminal value in four years (P4P4)?

Part 3

What is the value of the stock now?

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