template - Saved Search for tools, help, and more (Alt + Q) File Home Insert Share Page Layout Formulas Data Review View Help Draw Arial A A BI U ab 開く Wrap Merge General H33 fx 1 Nonconstant growth 2 3 Year 3 Dividend, D $1.75 4 Supernormal growth rate, g 29.00% 5 Normal growth rate, g 8.00% 6 Required return, 16.00% 7 8 9 Dividends 10 Ps 11 Cash flows to common stockholders 13 PV of cash flows to common stockholders 14 Stock Price, Po 15 16 Alternatively, using Excel NPV function: 17 Stock Price, Po 29.00% 29.00% 8.00% $1.75 19 20 21 22 Formulas 29.00% 29.00% 8.00% 0 4 23 Dividends 24 P 25 Cash flows to common stockholders 26 27 PV of cash flows to common stockholders 28 Stock Price, Po $1.7500 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 29 30 Alternatively, using Excel NPV function: 31 Stock Price, Po N/A 33 34 35 37 Sheet1 + M R Editing Comments

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter10: The Cost Of Capital
Section: Chapter Questions
Problem 1TCL: CALCULATING 3MS COST OF CAPITAL Use online resources to work on this chapters questions. Please note...
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Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from today. The dividend should grow rapidly - at a rate of 29% per year - during Years 4 and 5; but after Year 5, growth should be a constant 8% per year. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

 

 
Open spreadsheet

 

If the required return on Computech is 16%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.

$  fill in the blank 2

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template -Saved
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File
Home Insert Share
Page Layout
Formulas Data Review View
Help Draw
Arial
✓ 10
A A B I U ab D ✓ Gv
ab Wrap Merge v General
$
✓
H33
× ✓ fx
B
с
D
E
F
G
H
1
Nonconstant growth
2
3
Year 3 Dividend, D3
$1.75
4
Supernormal growth rate, gs
29.00%
5
Normal growth rate, gn
6 Required return, rs
8.00%
16.00%
7
8
9
Dividends
10 Ps
11
12
13
0
0
29.00%
29.00%
8.00%
4
$1.75
Cash flows to common stockholders
PV of cash flows to common stockholders
14 Stock Price, Po
15
16 Alternatively, using Excel NPV function:
17 Stock Price, Po
0
0
18
19
20
21
22
23
Dividends
Formulas
29.00%
29.00%
8.00%
0
2
3
4
5
6
0
0
$1.7500
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
223
24 Ps
25 Cash flows to common stockholders
26
27 PV of cash flows to common stockholders
28 Stock Price, Po
0
0
#N/A
#N/A
29
30 Alternatively, using Excel NPV function:
31 Stock Price, Po
#N/A
32
34
35
36
37
Sheet1
+
Workbook Statistics
Give Feedback to Microsoft
- 100% +
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Transcribed Image Text:聞く聞く曲く Editing Comments Tv Ov 囧v ✓ J K L M N о P Q R S T U template -Saved Search for tools, help, and more (Alt + Q) File Home Insert Share Page Layout Formulas Data Review View Help Draw Arial ✓ 10 A A B I U ab D ✓ Gv ab Wrap Merge v General $ ✓ H33 × ✓ fx B с D E F G H 1 Nonconstant growth 2 3 Year 3 Dividend, D3 $1.75 4 Supernormal growth rate, gs 29.00% 5 Normal growth rate, gn 6 Required return, rs 8.00% 16.00% 7 8 9 Dividends 10 Ps 11 12 13 0 0 29.00% 29.00% 8.00% 4 $1.75 Cash flows to common stockholders PV of cash flows to common stockholders 14 Stock Price, Po 15 16 Alternatively, using Excel NPV function: 17 Stock Price, Po 0 0 18 19 20 21 22 23 Dividends Formulas 29.00% 29.00% 8.00% 0 2 3 4 5 6 0 0 $1.7500 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 223 24 Ps 25 Cash flows to common stockholders 26 27 PV of cash flows to common stockholders 28 Stock Price, Po 0 0 #N/A #N/A 29 30 Alternatively, using Excel NPV function: 31 Stock Price, Po #N/A 32 34 35 36 37 Sheet1 + Workbook Statistics Give Feedback to Microsoft - 100% + く
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