Walmart has just paid an annual dividend of $3.39. Dividends are expected to grow by 6% for the next 4 years, and then grow by 3% thereafter. Walmart has a required return of 9%. What is the terminal value in four years and what is the intrinsic value of the stock now?

Walmart has just paid an annual dividend of $3.39. Dividends are expected to grow by 6% for the next 4 years, and then grow by 3% thereafter. Walmart has a required return of 9%. What is the terminal value in four years and what is the intrinsic value of the stock now?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Question

Walmart has just paid an annual dividend of $3.39. Dividends are expected to grow by 6% for the next 4 years, and then grow by 3% thereafter. Walmart has a required return of 9%.

What is the terminal value in four years and what is the intrinsic value of the stock now?

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