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 . A B C D E F G H 1 Inputs for GE Year Dividend Div growth Term...

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A B C D E F G H 1 Inputs for GE Year Dividend Div growth Term value Investor CF 2 beta 1.4 2019 3.12 3.12 3 mkt_prem 0.08 2020 3.38 3.38 4 rf 0.029 2021 3.64 3.64 5 k_equity 0.1410 2022 3.90 3.90 6 term_gwth 0.106 2023 4.19 0.0740 4.19 7 2024 4.51 0.0772 4.51 8 2025 4.87 0.0804 4.87 9 2026 5.28 0.0836 5.28 10 2027 5.74 0.0868 5.74 11 2028 6.26 0.0900 6.26 12 Value line 2029 6.84 0.0932 6.84 13 forecasts of 2030 7.50 0.0964 7.50 14 annual dividends 2031 8.25 0.0996 8.25 15 2032 9.09 0.1028 9.09 16 2033 10.06 0.1060 10.06 17 Transitional period 2034 11.13 0.1060 351.55 362.68 18 with slowing dividend 19 growth 72.90 = PV of CF 20 Beginning of constant E17 * (1+ F17)/(B5 - F17) 21 growth period NPV(B5, H2:H17) 22

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Calculate the intrinsic value of Rio Tinto in each of the following scenarios by using the three—stage growth model of §preadsheet 18.1. Treat each scenario independently. a. The terminal growth rate will be 11.50%. {Round your answer to 2 decimal places.) Intrinsic value I I b. Rio Tinto's actual beta is 1.06. (Round your answer to 2 decimal places.) Intrinsic value I I c. The market risk premium is 10.70%. (Round your answer to 2 decimal places.) Intrinsic value I I

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