Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $6.60 at the end of the first year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
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Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $6.60 at the end of the first year. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

 

 
TABLE 7.4 Value of Blue Skies
Horizon (years)
PV (dividends)
PV (terminal price)
Value per Share
1
$2.68
$72.32
$75
2
5.26
69.74
75
3
7.75
67.25
75
10
22.87
52.13
75
20
38.76
36.24
75
30
49.81
25.19
75
50
62.83
12.17
75
100
73.02
1.98
75
Transcribed Image Text:TABLE 7.4 Value of Blue Skies Horizon (years) PV (dividends) PV (terminal price) Value per Share 1 $2.68 $72.32 $75 2 5.26 69.74 75 3 7.75 67.25 75 10 22.87 52.13 75 20 38.76 36.24 75 30 49.81 25.19 75 50 62.83 12.17 75 100 73.02 1.98 75
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