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Lecture 4

# Lecture 4 - r g year 20 6 D P 0 1 6.4923656 1 1.06...

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r 20% g 6% year D P 0 1 6.4923656 1 1.06 6.7308387 2 1.1236 6.9534064 3 1.191016 7.1530717 4 1.262477 7.3212091 5 1.3382256 7.4472253 6 1.4185191 7.5181513 7 1.5036303 P0 if dividend grows at 6% per year 7.5714286 P6 if dividend grows at 6% per year 10.740216 PV 3.5968767 P6 if dividend = 1*(1+6%)^7 every year 7.5181513 PV 2.5178137 P0 for multiple stage growth 6.4923656

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discount rate 10% increase in book value 8% 2nd stage increase in book value 4% increase in earning 8% 2nd stage increase in earning 4% Continuing Expansion 2-stage Expansion year BVPS EPS b p ROE Dividend g P year BVPS EPS b p ROE Dividend g P 0 10 0.1 10 0 10 0.1 10 1 10.8 1 0.8 0.2 0.1 0.2 10.8 1 10.8 1 0.8 0.2 0.1 0.2 10.8 2 11.664 1.08 0.8 0.2 0.1 0.216 0.08 11.664 2 11.664 1.08 0.8 0.2 0.1 0.216 0.08 11.664 3 12.59712 1.1664 0.8 0.2 0.1 0.23328 0.08 12.59712 3 12.59712 1.1664 0.8 0.2 0.1 0.23328 0.08 12.59712 4 13.60489 1.259712 0.8 0.2 0.1 0.2519424 0.08 13.60489 4 13.60489 1.259712 0.8 0.2 0.1 0.2519424 0.08 13.60489
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Lecture 4 - r g year 20 6 D P 0 1 6.4923656 1 1.06...

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