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QUESTION
Need in excel spreadsheet. Diets For You announced today that it will begin paying annual dividends next year. The first dividend will be $0.12 a...
Need in excel spreadsheet. Diets For You announced today that it will begin paying annual dividends next year. The first dividend will be $0.12 a share. The following dividends will be $0.15, $0.20, $0.50, and $0.60 a share annually for the following 4 years, respectively. After that, dividends are projected to increase by 4 percent per year. How much are you willing to pay to buy one share of this stock today if your desired rate of return is 8.5 percent?
SOLUTION:Year Cash Flows PVF @ 8.5% Present Value 123455 $0.12$0.15$0.20$0.50$0.60$13.87 0.92170.84950.78290.72160.66500.6650 $0.11$0.13$0.16$0.36$0.40$9.22 Value of Stock...