You are examining Andrew Company's stock to see whether you should buy it. Yesterday, ANDREW paid dividends of $1.50. If you predict the dividend to rise at a pace of 6% over the next 3 years, then you believe that you can make money if you purchase the stock and then sell it after a little holding period. After 3 years, what do you predict dividends for ANDREW stock to be? b. Dividend yield is equal to 13%, thus the return on your investment needs to be at least that to allow for dividend discounting. Calculate the present value of the payout flow by first finding the PV of D1, D2, and D3. Then add these values together to get the PV of the dividend stream. c. Shares of ANDREW should be worth $27.05 in 3 years' time. This predicted future stock price has a discount applied to it, and its present value is $130. d. The value of a stock depends on how long you expect to retain it. For example, if you want to keep it for three years, and then trade it, what can you spend for it? e. To determine the current value of this stock, use the continuous growth model. Infer that gL = 6 percent. f. Whether you intend to keep the stock for a while or not has a great impact on the stock's value. You may thus conclude that, if your anticipated holding duration were 2 years or 5 years instead of 3 years, the value of the stock currently would be significantly impacted. Explain. A photovoltaic system newly produced by Roza Brown Technologies (RBT) is able to manufacture over 200% more power than any other solar panel now on the market. This means that, because of the factors listed above, RBT will likely enjoy an annual growth rate over the next 5 years. It is certain that other enterprises will have developed equivalent technology by the end of the fifth year, and RBT's growth rate will be reduced each year perpetually. In order for shareholders to get 12% on RBT's shares, there must be a return for all shareholders. D0, which was paid yesterday, paid out $1.75 per share as one of thelatest annual dividend. In order to calculate RBT's anticipated dividends, first calculate RBT's current dividends. Using the example above, calculate the expected intrinsic value of the shares today: Commence by figuring the current value of the dividend payments that will be paid out between the present time and the fifth time value is reached, between the second time value is reached, between the third time value is reached, and between the fourth time value is reached, as well as the present share price. In order to calculate the price of a stock, just use the perpetual growth formula. Because you need to utilize the anticipated dividend of 6 at t = 6, which is 5% more than the dividend of 5 for t = 5, apply that anticipated dividend. To figure out the projected yield of dividends in the first year, you need to first calculate the return of dividends in the first year and then add it to the overall Assume that the total return is equal to the cgy, and assume that the capital