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Unformatted text preview: 8.00% from end year 5 to inFnity P at end of year 5 72.41 using D6/(r-g) PV of the above P 37.61 initial price $47.87 price increases with a greater supernormal growth rate Problem #5 PV initial (recent) D 2.00 D1 2.24 1.96491 D2 2.51 1.93044 r 14.00% D3 2.81 1.89657 D4 3.15 1.8633 PV of D's growth for 5 yrs 12.00% D5 3.52 1.83061 9.49 D6 3.88 constant growth 10.00% from end year 5 to inFnity P at end of year 5 96.93 using D6/(r-g) (terminal value) PV of the above P 50.34 initial price $59.83 price increases with a greater constant growth rate Problem #6 This is two-stage growth, where the initial period growth rate is zero. At the start of year 6 (5 years from today) the CG model applies. D6 = 2.00 P at end of year 5 $50.00 (i.e. start of year 6) using D6/(r-g) PV of the above P which is today's price $28.37...
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- Spring '10