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Your boss wants you to create a spreadsheet for a 2-stage dividend discount model valuation. The spreadsheet takes inputs of The most recent annual dividend,
Your boss wants you to create a spreadsheet for a 2-stage dividend discount model valuation. The spreadsheet takes inputs of The most recent annual dividend, Do The cost of equity in the first stage, k1 The dividend growth rate in the first stage, g1 The duration (in years) of the first stage growth period The cost of equity in the second stage, k_2 The dividend growth rate in the second stage (into perpetuity), g_2 and. returns the intrinsic (model) value for the stock. The configuration of your spreadsheet is Copy and paste the formula you use in cell B13. What is the intrinsic value of a stock with the following inputs. Make a Data-table that finds intrinsic values for varying duration of Stage l values (from 1 year to 10 years). Create a chart with duration of Stage 1 on the x-axis and Intrinsic, value on the y-axis. Based upon your chart, do you think Intrinsic Value is very sensitive to the assumed duration of the Stage 1 growth period? Explain
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