ch13two_stage_i - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17...

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Two Stage Growth Model Initial Earnings 4.00 First Stage Growth Rate Initial Dividend 2.00 Stage 1 Growth 0.14 47.34 0.1 0.11 0.12 0.13 0.14 Duration of Growth 1 10 5 33.48 34.85 36.28 37.76 39.28 Estimated Constant Growth 0.08 10 35.57 38.20 41.03 44.08 47.34 Beta Coefficient 1.25 Duration 15 37.25 41.01 45.20 49.86 55.06 T-Bill Rate 0.05 of Growth 20 38.60 43.36 48.85 55.17 62.45 Market Risk Premium 0.08 25 39.67 45.33 52.04 60.02 69.53 30 40.54 46.98 54.84 64.47 76.30 Required Return 0.15 35 41.23 48.36 57.30 68.55 82.78 Ratio of (1+g)/(1+k) 0.99 40 41.78 49.52 59.45 72.28 88.99 Closed End 9.53 PValue of the Stage 1 Dividends 19.07 PValue of the Stage 2 Dividends 28.28 Value of the Stock 47.34 Analysis of Growth Opportunities Value of NoGrowth Firm 26.67 Present Value of Growth Opportunities 20.68 A B C D E F G H I J 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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Two Stage Growth Model Solution 1-3 Initial Earnings 5.00 Initial Dividend 3.00 Stage 1 Growth 0.17 Duration of Growth 1
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